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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ______)*
CONNER PERIPHERALS, INC.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
208 108 100
-------------------------------------------------------
(CUSIP Number)
Thomas F. Mulvaney, Esq., Conner Peripherals, Inc.,
3081 Zanker Road, San Jose, CA 95134
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
10/3/95
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/ (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 208 108 100 Page 2 of 5 Pages
SCHEDULE 13D
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Seagate Technology, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
N/A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
920 Disc Drive
P. O. Box 66360
Scotts Valley, CA 96067
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7 SOLE VOTING POWER
NUMBER OF In the event the Stock Option becomes exercisable and is
exercised in full, Seagate will have sole voting power with
SHARES respect to 8,015,420 shares of Common Stock of Conner.*
-----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
In the event the Stock Option becomes exercisable and is
REPORTING exercised in full, Seagate will have sole dispositive power
with respect to 8,015,420 shares of Common Stock of Conner.*
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
In the event the Stock Option becomes exercisable and is exercised in full,
Seagate will beneficially own 8,015,420 shares of Common Stock of Conner.*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
N/A
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.0%
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14 TYPE OF REPORTING PERSON
CO
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CUSIP NO. 208 108 100 Page 3 of 5 Pages
Item 1. Security: Common Stock
Item 2. Reporting Person: Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, CA 96067
No disclosure of legal proceedings is required pursuant to
Items 2(d) or 2(e).
Item 3. Source of Funds: Working Capital
Item 4. Purpose of Transaction: Seagate Technology, Inc. ("Seagate"),
Athena Acquisition Corporation and Conner Peripherals, Inc.
("Conner") entered into an Agreement and Plan of Reorganization,
dated as of October 3, 1995 (the "Reorganization Agreement")
pursuant to which Seagate will acquire Conner, and Conner will
become a wholly owned subsidiary of Seagate. Consummation of the
Reorganization Agreement is subject to the satisfaction or waiver
of a number of conditions to closing. As a condition to
Seagate's willingness to enter into the Reorganization Agreement,
Seagate required that Conner agree, and Conner agreed, to enter
into an option agreement granting Seagate the right to purchase
8,015,420 shares of Conner Common Stock. Such option becomes
exercisable in the event (i) any person other than Seagate
acquires more than 20% of the outstanding shares of Conner Common
Stock, (ii) any person other than Seagate makes a tender offer
for at least 20% of the outstanding shares of Conner Common
Stock, or (iii) Conner enters into a written agreement in
connection with an alternate business combination or other
similar transaction. Conner's obligation to issue shares
pursuant to the exercise of the option is subject to the
satisfaction or waiver of certain conditions, including the
expiration or termination of any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and that
no order, decree or injunction of any competent court or
regulatory agency is in effect which prohibits the exercise of
the option.
Item 5(a). Beneficial Ownership: In the event the stock option is exercised
in full, Seagate will beneficially own a total of 8,015,420
shares of Common Stock of Conner, representing 13.0% of the
outstanding Common Stock of Conner.*
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CUSIP NO. 208 108 100 Page 4 of 5 Pages
Item 5(b). Sole Voting Power: In the event the Stock Option is exercised in
full, Seagate will have sole power to vote 8,015,420 shares of
Conner Common Stock.
Item 5(c). Transactions: On October 3, 1995, Seagate and Conner entered
into the Reorganization Agreement pursuant to which Seagate will
acquire Conner, and Conner will become a wholly owned subsidiary
of Seagate. Consummation of the Reorganization Agreement is
subject to the satisfaction or waiver of a number of conditions
to closing.
Item 5(d). Not Applicable.
Item 5(e). Not Applicable.
Item 6. Arrangements: On October 3, 1995, Seagate and Conner entered
into the Reorganization Agreement pursuant to which Seagate will
acquire Conner, and Conner will become a wholly owned subsidiary
of Seagate. Consummation of the Reorganization Agreement is
subject to the satisfaction or waiver of a number of conditions
to closing.
Item 7. Exhibits.
Exhibit 1. The Agreement and Plan of Reorganization among
Seagate Technology, Inc., Athena Acquisition
Corporation and Conner Peripherals, Inc., dated as
of October 3, 1995, including exhibits thereto.
Exhibit 2. Stock Option Agreement between Seagate Technology,
Inc. and Conner Peripherals, Inc., dated as of
October 3, 1995.
____________________
* The stock option is not exercisable except upon the occurence of
certain events, which may or may not occur. Due to the contingent nature of
the stock option, as of the date of this Schedule 13D, Seagate disclaims
beneficial ownership of the shares subject to the stock option. The number
of shares issuable upon exercise of the option shall be adjusted in the event
that any additional shares of Conner Common Stock are issued. In the event
the merger is consummated, Seagate will acquire all of the outstanding Common
Stock of Conner and Conner will become a wholly owned subsidiary of Seagate.
<PAGE>
CUSIP NO. 208 108 100 Page 5 of 5 Pages
Signature:
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Seagate Technology, Inc.
10/12/95 By: /s/ Stephen J. Luczo
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Date Signature
Stephen J. Luczo/Executive Vice President,
Corporate Development
---------------------------------------------
Name/Title
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- --------------------------------------------------------------------------------
EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
SEAGATE TECHNOLOGY, INC.,
ATHENA ACQUISITION CORPORATION
AND
CONNER PERIPHERALS, INC.
OCTOBER 3, 1995
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TABLE OF CONTENTS
PAGE
----
ARTICLE 1- THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation and Bylaws of Surviving Corporation . . 2
1.6 Tax-Free Reorganization; Pooling of Interests. . . . . . . . . . . . 3
ARTICLE 2 - EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . 3
2.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . . . 3
(a) Capital Stock of Sub. . . . . . . . . . . . . . . . . . . . . . 3
(b) Cancellation of Certain Shares of Conner Common Stock . . . . . 3
(c) Exchange Ratio for Conner Common Stock. . . . . . . . . . . . . 3
(d) Adjustment of Exchange Ratio. . . . . . . . . . . . . . . . . . 4
2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . 4
(a) Exchange Agent. . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . 4
(c) Distributions with Respect to Unsurrendered Certificates. . . . 5
(d) No Further Ownership Rights in Conner Common Stock. . . . . . . 5
(e) No Issuance of Fractional Shares. . . . . . . . . . . . . . . . 6
(f) Termination of Exchange Fund. . . . . . . . . . . . . . . . . . 6
(g) No Liability. . . . . . . . . . . . . . . . . . . . . . . . . . 6
(h) Lost, Stolen or Destroyed Certificates. . . . . . . . . . . . . 6
2.3 Taking of Necessary Action; Further Action . . . . . . . . . . . . . 6
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF CONNER . . . . . . . . . . . . . 7
3.1 Organization and Qualification; Subsidiaries . . . . . . . . . . . . 7
3.2 Certificate of Incorporation and Bylaws. . . . . . . . . . . . . . . 8
3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . . 9
3.5 No Conflict; Required Filings and Consents . . . . . . . . . . . . .10
3.6 Compliance; Permits. . . . . . . . . . . . . . . . . . . . . . . . .11
3.7 SEC Filings; Financial Statements. . . . . . . . . . . . . . . . . .11
3.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . .12
3.9 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . .12
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PAGE
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3.10 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . .12
3.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . .13
3.12 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.13 Registration Statement; Proxy Statement. . . . . . . . . . . . . . .14
3.14 Restrictions on Business Activities. . . . . . . . . . . . . . . . .15
3.15 Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . .15
3.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . .16
3.18 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.19 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . .17
3.20 Pooling Matters. . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.21 Conner Rights Agreement. . . . . . . . . . . . . . . . . . . . . . .18
3.22 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.23 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . .18
3.24 Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.25 Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.26 Section 203 of the Delaware Statute Not Applicable . . . . . . . . .19
3.27 Conner Ownership of Seagate Common Stock; Seagate Not an
Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF SEAGATE AND SUB. . . . . . . . .19
4.1 Organization and Qualification; Subsidiaries . . . . . . . . . . . .19
4.2 Certificate of Incorporation and Bylaws. . . . . . . . . . . . . . .20
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . .21
4.5 No Conflict; Required Filings and Consents.. . . . . . . . . . . . .22
4.6 Compliance; Permits. . . . . . . . . . . . . . . . . . . . . . . . .23
4.7 SEC Filings; Financial Statements. . . . . . . . . . . . . . . . . .24
4.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . .24
4.9 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . .24
4.10 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . .25
4.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . .25
4.12 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . .26
4.13 Registration Statement; Proxy Statement. . . . . . . . . . . . . . .27
4.14 Restrictions on Business Activities. . . . . . . . . . . . . . . . .27
4.15 Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . .27
4.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
4.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . .28
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PAGE
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4.18 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
4.19 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . .29
4.20 Pooling Matters. . . . . . . . . . . . . . . . . . . . . . . . . . .30
4.21 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
4.22 Opinion of Financial Advisor.. . . . . . . . . . . . . . . . . . . .30
4.23 Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . . .30
4.24 Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . .30
4.25 Interim Operations of Sub. . . . . . . . . . . . . . . . . . . . . .30
4.26 Section 203 of the Delaware Statute Not Applicable.. . . . . . . . .31
4.27 Seagate Ownership of Conner Common Stock . . . . . . . . . . . . . .31
ARTICLE 5 - CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE
TIME; ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . .31
5.1 Information and Access . . . . . . . . . . . . . . . . . . . . . . .31
5.2 Conduct of Business of the Companies . . . . . . . . . . . . . . . .32
5.3 Negotiation With Others. . . . . . . . . . . . . . . . . . . . . . .35
5.4 Preparation of S-4 and the Proxy Statement; Other Filings. . . . . .37
5.5 Advice of Changes; SEC Filings . . . . . . . . . . . . . . . . . . .37
5.6 Letter of Conner's Independent Auditors. . . . . . . . . . . . . . .37
5.7 Letter of Seagate's Independent Auditors . . . . . . . . . . . . . .38
5.8 Stockholders Meetings. . . . . . . . . . . . . . . . . . . . . . . .38
5.9 Agreements to Take Reasonable Action . . . . . . . . . . . . . . . .38
5.10 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
5.11 NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
5.12 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . .40
5.13 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
5.14 Conner Options . . . . . . . . . . . . . . . . . . . . . . . . . . .41
5.15 Conner Employee Stock Purchase Plan. . . . . . . . . . . . . . . . .41
5.16 Indemnification and Insurance. . . . . . . . . . . . . . . . . . . .42
5.17 Notification of Certain Matters. . . . . . . . . . . . . . . . . . .43
5.18 Pooling Accounting . . . . . . . . . . . . . . . . . . . . . . . . .43
5.19 Conner Debentures. . . . . . . . . . . . . . . . . . . . . . . . . .43
5.20 Benefit Plans Generally. . . . . . . . . . . . . . . . . . . . . . .44
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<PAGE>
ARTICLE 6 - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . .44
6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . .44
(a) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
(b) Stockholder Approval. . . . . . . . . . . . . . . . . . . . . .44
(c) Effectiveness of the S-4. . . . . . . . . . . . . . . . . . . .45
(d) Governmental Entity Approvals . . . . . . . . . . . . . . . . .45
(e) No Injunctions or Restraints; Illegality. . . . . . . . . . . .45
(f) Tax Opinions. . . . . . . . . . . . . . . . . . . . . . . . . .45
(g) Pooling-of-Interests Accounting Treatment . . . . . . . . . . .45
(h) NYSE Listing. . . . . . . . . . . . . . . . . . . . . . . . . .46
6.2 Conditions of Obligations of Seagate and Sub.. . . . . . . . . . . .46
(a) Representations and Warranties. . . . . . . . . . . . . . . . .46
(b) Performance of Obligations of Conner. . . . . . . . . . . . . .46
(c) Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . .46
6.3 Conditions of Obligation of Conner . . . . . . . . . . . . . . . . .46
(a) Representations and Warranties. . . . . . . . . . . . . . . . .46
(b) Performance of Obligations of Seagate and Sub.. . . . . . . . .47
(c) Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
ARTICLE 7 - TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . .49
7.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .49
ARTICLE 8 - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . .50
8.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.2 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . .50
8.3 Nonsurvival of Representations, Warranties and Agreements. . . . . .51
8.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
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<PAGE>
8.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
8.9 Benefits; Assignment . . . . . . . . . . . . . . . . . . . . . . . .53
8.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .53
EXHIBITS
A Conner Stock Option Agreement
B Form of Agreement of Merger
C Form of Conner Affiliate Agreement
D Form of Seagate Affiliate Agreement
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is dated as of
October 3, 1995, among SEAGATE TECHNOLOGY, INC., a Delaware corporation
("Seagate"), ATHENA ACQUISITION CORPORATION, a Delaware corporation and wholly-
owned subsidiary of Seagate ("Sub"), and CONNER PERIPHERALS, INC., a Delaware
corporation ("Conner"). Seagate and Conner are sometimes referred to
individually as a "Company" and collectively as the "Companies."
RECITALS:
A. The Boards of Directors of Conner, Seagate and Sub have each
approved the terms and conditions of the business combination between Seagate
and Conner to be effected by the merger (the "Merger") of Sub with and into
Conner, pursuant to the terms and subject to the conditions of this Agreement
and the General Corporation Law of the State of Delaware (the "Delaware
Statute").
B. Concurrently herewith and as a condition and inducement to Seagate's
willingness to enter into this Agreement, Seagate and Conner are entering into a
Conner Stock Option Agreement in the form attached as EXHIBIT A (the "Conner
Option Agreement"), pursuant to which Conner is granting to Seagate an option to
purchase shares of Common Stock of Conner upon the occurrence of certain
conditions.
C. The Boards of Directors of Conner and Seagate have each approved the
Conner Option Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained in this Agreement, the parties agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions of this
Agreement and the Agreement of Merger in substantially the form attached as
EXHIBIT B (the "Merger Agreement") and in accordance with the Delaware Statute,
Sub shall be merged with and into Conner. The Merger Agreement provides for the
mode of consummating the Merger and the effects thereof. Conner and Sub shall
execute the Merger Agreement immediately prior to the Closing. Following the
Merger, Conner shall continue as the surviving corporation (the
<PAGE>
"Surviving Corporation") and the separate corporate existence of Sub shall
cease. Sub and Conner are collectively referred to as the "Constituent
Corporations." Unless the context otherwise requires, the term "Agreement"
includes the Merger Agreement.
1.2 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement and the Merger Agreement, the Merger Agreement, together with any
required certificates, shall be duly filed in accordance with the Delaware
Statute simultaneously with or as soon as practicable following the Closing (as
defined in Section 1.3 below). The Merger shall become effective (the
"Effective Time") upon the filing of the Merger Agreement (together with any
required certificates) with the Secretary of State of the State of Delaware.
1.3 CLOSING. Unless this Agreement shall have been terminated pursuant
to Section 7.1, the closing of the Merger (the "Closing") will take place at
10:00 a.m. on a date (the "Closing Date") to be mutually agreed upon by the
parties, which date shall be no later than the third Business Day (as defined
below) after all of the conditions set forth in Article 6 shall have been
satisfied (or waived in accordance with Section 8.2), unless another date is
agreed to in writing by the parties. The Closing shall take place at the
offices of Wilson, Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo Alto,
California, 94304-1050, unless another place is agreed to in writing by the
parties. As used in this Agreement, "Business Day" shall mean any day, other
than a Saturday, Sunday or legal holiday on which banks are permitted to close
in the City and State of New York.
1.4 EFFECTS OF THE MERGER. At the Effective Time: (i) the separate
existence of Sub shall cease and Sub shall be merged with and into Conner as the
Surviving Corporation, and (ii) the Merger shall have all of the effects
provided by the Delaware Statute.
1.5 CERTIFICATE OF INCORPORATION AND BYLAWS OF SURVIVING CORPORATION.
At the Effective Time, (i) the Certificate of Incorporation of Conner shall be
amended so that Article Fourth of such Certificate of Incorporation reads in its
entirety as follows: "The total number of shares of all classes of stock which
the corporation shall have authority to issue is 1,000, all of which shall
consist of Common Stock, par value $.001 per share.", and, as so amended, such
Certificate of Incorporation shall be the Certificate of Incorporation of the
Surviving Corporation until altered, amended or repealed as provided in the
Delaware Statute; (ii) the Bylaws of Sub shall become the Bylaws of the
Surviving Corporation until altered, amended or repealed as provided in the
Delaware Statute or in the Certificate of Incorporation or Bylaws of the
Surviving Corporation; (iii) the directors of Sub shall become the initial
directors of the Surviving Corporation and will hold office from the Effective
Time until their respective successors are duly elected or appointed as provided
in the Certificate of Incorporation and Bylaws of the Surviving Corporation; and
(iv) the officers of Sub shall become the initial officers of the Surviving
Corporation.
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1.6 TAX-FREE REORGANIZATION; POOLING OF INTERESTS. The parties intend
that the Merger be treated as a tax free reorganization under Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and to be accounted
for as a pooling of interests pursuant to Opinion No. 16 of the Accounting
Principles Board.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, subject and
pursuant to the terms of this Agreement and the Merger Agreement, by virtue of
the Merger and without any action on the part of the Constituent Corporations or
the holders of any shares of capital stock of the Constituent Corporations:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
the common stock, $.001 par value, of Sub shall be converted into one share of
common stock, $.001 par value, of the Surviving Corporation. Each stock
certificate of Sub evidencing ownership of any such shares shall continue to
evidence ownership of such shares of common stock of the Surviving Corporation.
(b) CANCELLATION OF CERTAIN SHARES OF CONNER COMMON STOCK. Each
share of Conner Common Stock (as defined in Section 2.1(c)) that is owned by
Conner as treasury stock and each share of Conner Common Stock that is owned by
Seagate, Sub or any other subsidiary of Seagate or Conner shall be canceled and
no capital stock of Seagate or other consideration shall be delivered in
exchange therefor.
(c) EXCHANGE RATIO FOR CONNER COMMON STOCK. Each share of common
stock, $.001 par value, of Conner ("Conner Common Stock") issued and outstanding
at the Effective Time (other than shares canceled pursuant to Section 2.1(b)),
including the corresponding right (the "Conner Right") to purchase one one-
hundredth of a share of Preferred Stock, $.001 par value (the "Conner Series A
Preferred") of Conner pursuant to the terms of the Preferred Shares Rights
Agreement dated as of November 29, 1994, between Conner and The First National
Bank of Boston as Rights Agent, as it may be amended from time to time (the
"Conner Rights Agreement"), shall be converted into the right to receive
0.442 shares of common stock, $.01 par value, of Seagate ("Seagate Common
Stock") (the "Exchange Ratio"). Prior to the Distribution Date (as defined in
the Conner Rights Agreement) and unless the context otherwise requires, all
references in this Agreement to the Conner Common Stock shall be deemed to
include the Conner Rights.
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(d) ADJUSTMENT OF EXCHANGE RATIO. If between the date of this
Agreement and the Effective Time, the outstanding shares of Seagate Common Stock
or Conner Common Stock shall have been changed into a different number of shares
or a different class by reason of any reclassification, recapitalization, split-
up, stock dividend, stock combination, exchange of shares, readjustment or
otherwise, then the Exchange Ratio shall be correspondingly adjusted; PROVIDED,
HOWEVER, that any such changes shall be subject to Section 5.2 below.
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Closing Date, Seagate shall
select a bank or trust company reasonably acceptable to Conner to act as
exchange agent (the "Exchange Agent") in the Merger. Promptly after the
Effective Time, Seagate shall deposit with the Exchange Agent, for the benefit
of the holders of shares of Conner Common Stock, for exchange in accordance with
this Article 2 and the Merger Agreement, certificates representing the shares of
Seagate Common Stock (such shares of Seagate Common Stock, together with any
dividends or distributions with respect thereto, are referred to as the
"Exchange Fund") issuable pursuant to this Article 2 and the Merger Agreement in
exchange for outstanding shares of Conner Common Stock, and cash in an amount
sufficient for payment in lieu of fractional shares pursuant to Section 2.2(e).
(b) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record (other
than Conner, any subsidiary of Conner, Sub, Seagate and any other subsidiary of
Seagate) (including holders of record pursuant to purchases made under the
Conner Purchase Plan (as defined in Section 5.15) immediately prior to the
Effective Time pursuant to Section 5.15) of a certificate or certificates which
immediately prior to the Effective Time represented issued and outstanding
shares of Conner Common Stock (collectively, the "Certificates") whose shares
are being converted into Seagate Common Stock pursuant to Section 2.1(c) of this
Agreement and the provisions of the Merger Agreement, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Seagate and Conner may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing Seagate Common Stock. Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Seagate Common Stock which such holder has the right to receive pursuant to the
provisions of this Article 2 and the Merger Agreement, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of shares of
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Conner Common Stock which is not registered on the transfer records of Conner, a
certificate representing the proper number of shares of Seagate Common Stock may
be issued to a transferee if the Certificate representing such Conner Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 2.2 and the Merger Agreement, each Certificate shall be deemed, on and
after the Effective Time, to represent only the right to receive upon such
surrender the certificate representing shares of Seagate Common Stock and cash
in lieu of any fractional shares of Seagate Common Stock as contemplated by this
Article 2, the Merger Agreement and the Delaware Statute.
(c) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No
dividends or other distributions declared or made after the Effective Time with
respect to Seagate Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Seagate Common Stock represented thereby and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to Section 2.2(e)
or the Merger Agreement until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect, if any, of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Seagate Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Seagate Common Stock to which such holder is entitled pursuant to Section 2.2(e)
and the Merger Agreement and the amount of dividends or other distributions with
a record date after the Effective Time theretofore paid with respect to such
whole shares of Seagate Common Stock and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Seagate Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN CONNER COMMON STOCK. All
shares of Seagate Common Stock issued upon the surrender for exchange of shares
of Conner Common Stock in accordance with the terms of this Article 2 and the
Merger Agreement (including any cash paid pursuant to Section 2.2(c) or 2.2(e))
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Conner Common Stock. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Conner Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article 2 and the Merger
Agreement.
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(e) NO ISSUANCE OF FRACTIONAL SHARES. No certificates or scrip
for fractional shares of Seagate Common Stock shall be issued, but in lieu
thereof each holder of shares of Conner Common Stock who would otherwise be
entitled to receive certificates or scrip for a fraction of a share of Seagate
Common Stock shall receive from Seagate, at such time as such holder shall
receive a certificate representing shares of Seagate Common Stock, an amount of
cash equal to the per share market value of Seagate Common Stock determined by
multiplying (i) the closing price of a share of Seagate Common Stock as reported
on the New York Stock Exchange, Inc. (the "NYSE") composite tape on the last
full trading day prior to the Effective Time by (ii) the fraction of a share of
Seagate Common Stock to which such holder would otherwise be entitled. The
fractional share interests of each stockholder of Conner shall be aggregated, so
that no Conner stockholder shall receive cash in an amount equal to or greater
than the value of one full share of Seagate Common Stock.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the stockholders of Conner for twelve months
after the Effective Time shall be delivered to Seagate, upon demand, and any
former stockholders of Conner who have not previously complied with this
Article 2 and the Merger Agreement shall thereafter look only to Seagate for
payment of their claim for Seagate Common Stock, any cash in lieu of fractional
shares of Seagate Common Stock and any dividends or distributions with respect
to Seagate Common Stock.
(g) NO LIABILITY. Neither the Exchange Agent, Seagate, Sub nor
Conner shall be liable to any holder of shares of Conner Common Stock or Seagate
Common Stock, as the case may be, for shares (or dividends or distributions with
respect thereto) from the Exchange Fund delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(h) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates evidencing shares of Conner Common Stock shall have been lost,
stolen or destroyed, the holder of such lost, stolen or destroyed Certificate(s)
shall execute an affidavit of that fact upon request. The holder of any such
lost, stolen or destroyed Certificate(s) shall also deliver a bond in such sum
as Seagate may reasonably require as indemnity against any claim that may be
made against Seagate or the Exchange Agent with respect to the Certificate(s)
alleged to have been lost, stolen or destroyed. The affidavit and any bond
which may be required hereunder shall be delivered to the Exchange Agent, who
shall be responsible for making payment for such lost, stolen or destroyed
Certificate(s).
2.3 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Conner and Sub, the officers
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and directors of Conner and Sub are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CONNER
Conner represents and warrants to Seagate and Sub, except as set forth in
the Conner SEC Reports (as defined in Section 3.7(a)) or the disclosure letter
delivered by Conner to Seagate on or prior to the date of this Agreement (the
"Conner Disclosure Letter"), as follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (i) Each of Conner
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being conducted. Each
of Conner and its subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders ("Approvals") necessary to own, lease and operate the properties it
purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse Effect (as defined
below). Each of Conner and its subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect. When used in connection with Conner or any of its
subsidiaries, the term "Material Adverse Effect" means any change, event or
effect that is materially adverse to the business, assets (including intangible
assets), liabilities, financial condition or results of operations of Conner and
its subsidiaries taken as a whole; PROVIDED, HOWEVER, that a "Material Adverse
Effect" shall not include any adverse effect on the revenues or gross margins of
Conner (or the direct consequences thereof) following the date of this Agreement
which is attributable to (i) a delay of, reduction in or cancellation or change
in the terms of product orders by customers of Conner or (ii) an increase in the
price of, a delay of, reduction in or cancellation of or change in terms with
respect to products or components supplied by vendors of Conner, which in either
case is attributable to the transactions contemplated by this Agreement. Other
than wholly-owned subsidiaries and except as permitted after the date of this
Agreement under Section 5.2 of this Agreement, Conner does not directly or
indirectly own any equity or similar interest in, or
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any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business, association or entity.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Conner has previously
furnished to Seagate a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date. Such Certificate of Incorporation,
Bylaws and equivalent organizational documents of each of its subsidiaries are
in full force and effect. Neither Conner nor any of its subsidiaries is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent organizational documents.
3.3 CAPITALIZATION. The authorized capital stock of Conner consists of
100,000,000 shares of Conner Common Stock and 20,000,000 shares of Preferred
Stock ("Conner Preferred Stock"), each having a par value of $.001 per share,
of Conner. At the close of business on September 2, 1995, (i) 53,436,131 shares
of Conner Common Stock were issued and outstanding all of which are validly
issued, fully paid and nonassessable, (ii) no shares of Conner Common Stock were
held in treasury by Conner or by subsidiaries of Conner, (iii) 2,328,643 shares
of Conner Common Stock were available for future issuance pursuant to Conner's
employee stock purchase plan, (iv) 7,168,859 shares of Conner Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Conner Common Stock under the Conner 1986 Incentive Stock Plan, as amended (the
"1986 Plan"), the 1981 Archive Incentive Stock Plan and 1981 Archive
Nonqualified Stock Plan (the "Archive Plans"), and the Conner 1995 Director
Stock Plan (the "1995 Plan"), (v) 5,901,585 shares of Conner Common Stock were
available for future grant under the 1986 Plan, the Archive Plans and the 1995
Plan, (vi) 783,000 shares of Conner Common Stock were available for future
issuance under the Conner 1992 Restricted Stock Plan, (vii) 20,116,353 shares of
Conner Common Stock were reserved for future issuance upon conversion of Conner
Debentures (as defined in Section 5.19) and (viii) 8,015,420 shares of Conner
Common Stock were reserved for future issuance pursuant to the Conner Option
Agreement. As of the date hereof, no shares of Conner Preferred Stock were
issued or outstanding and 1,000,000 shares of Conner Series A Preferred were
reserved for issuance upon exercise of the Conner Rights. No change in such
capitalization has occurred between September 2, 1995 and the date hereof except
(A) the issuance of shares of Conner Common Stock pursuant to the exercise of
outstanding options, (B) shares issued under Conner's employee stock purchase
plan, (C) shares issued upon conversion of Conner Debentures and (D) the
issuance of options as permitted under Section 5.2(c) hereof (and exercise of
such options). Except as set forth in this Section 3.3 and except for the
options (the "Arcada Options") to acquire common stock of Arcada ("Arcada Common
Stock") listed on the Conner Disclosure Letter, as of the date of this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Conner or any of its subsidiaries or obligating Conner or any
of its subsidiaries to issue or sell any shares of capital stock of, or other
equity interests
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in, Conner or any of its subsidiaries. All shares of Conner Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall be duly
authorized, validly issued, fully paid and nonassessable. Other than with
respect to the Arcada Options and such actions as are permitted under Section
5.2, there are no obligations, contingent or otherwise, of Conner or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of Conner
Common Stock or the capital stock of any subsidiary or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any such subsidiary or any other entity other than guarantees of obligations
of subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock (other than directors' qualifying shares) of
each of Conner's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and, other than the shares subject to the Arcada Options, all such
shares (other than directors' qualifying shares) are owned by Conner or another
subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in Conner's voting rights, charges or other encumbrances
of any nature whatsoever.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Conner has all necessary
corporate power and authority to execute and deliver this Agreement and the
Conner Option Agreement and to perform its obligations hereunder and thereunder
and, subject to obtaining the approval of the stockholders of Conner of the
Merger, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Conner Option Agreement by
Conner and the consummation by Conner of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of Conner and no other corporate proceedings on the part of
Conner are necessary to authorize this Agreement, the Conner Option Agreement or
to consummate the transactions so contemplated (other than, with respect to the
Merger, the approval and adoption of this Agreement by holders of a majority of
the outstanding shares of Conner Common Stock in accordance with the Delaware
Statute and Conner's Certificate of Incorporation and Bylaws). This Agreement
and the Conner Option Agreement have been duly and validly executed and
delivered by Conner and, assuming the due authorization, execution and delivery
by Seagate and Sub, constitute legal and binding obligations of Conner,
enforceable against Conner in accordance with their respective terms, subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors rights generally and (ii) the availability of
injunctive relief and other equitable remedies. The Merger Agreement, when
executed and delivered by Conner as contemplated hereby, will be duly executed
and delivered by Conner and when approved by the stockholders of Conner and
assuming the due authorization, execution and delivery by Sub, will be the valid
and binding obligation of Conner, enforceable against Conner in accordance with
its terms, subject to (i) bankruptcy, insolvency, reorganization, moratorium or
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other similar laws affecting or relating to creditors rights generally and
(ii) the availability of injunctive relief and other equitable remedies.
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement and the Conner
Option Agreement by Conner do not, and the performance of this Agreement and the
Conner Option Agreement by Conner shall not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws or equivalent organizational documents of
Conner or any of its subsidiaries, (ii) subject to obtaining the approval of
Conner's stockholders of the Merger and compliance with the requirements set
forth in Section 3.5(b) below, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Conner or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Conner's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Conner or any of its subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Conner or any of
its subsidiaries is a party or by which Conner or any of its subsidiaries or its
or any of their respective properties are bound or affected, except for any such
breaches, defaults or other occurrences that could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. The Conner
Disclosure Letter lists all material consents, waivers and approvals under any
of Conner's or any of its subsidiaries' agreements, contracts, licenses or
leases required to be obtained in connection with the consummation of the
transactions contemplated hereby and by the Conner Option Agreement.
(b) The execution and delivery of this Agreement and the Conner
Option Agreement by Conner do not, and the performance of this Agreement by
Conner shall not, require any consent, approval, authorization or permit of, or
filing with or notification to, any court, administrative agency, commission,
governmental or regulatory authority, domestic or foreign (a "Governmental
Entity"), except (A) for applicable requirements, if any, of the Securities Act
of 1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), state securities laws ("Blue Sky Laws"), the
pre-merger notification requirements (the "HSR Approval") of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and of
foreign Governmental Entities and the rules and regulations thereunder, the NYSE
rules and regulations and the filing and recordation of the Merger Agreement as
required by the Delaware Statute and (B) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, (i) would not prevent consummation of the Merger or
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otherwise prevent Conner from performing its obligations under this Agreement or
(ii) could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
3.6 COMPLIANCE; PERMITS.
(a) Neither Conner nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to Conner or any of its subsidiaries or by which
its or any of their respective properties is bound or affected, or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Conner or any of its
subsidiaries is a party or by which Conner or any of its subsidiaries or its or
any of their respective properties is bound or affected, except for any
conflicts, defaults or violations which could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. To the best
knowledge of Conner, no investigation or review by any governmental or
regulatory body or authority is pending or threatened against Conner or its
subsidiaries, nor has any governmental or regulatory body or authority indicated
an intention to conduct the same, other than, in each such case, those the
outcome of which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) Conner and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to operation of the business of Conner and its subsidiaries taken
as a whole (collectively, the "Conner Permits"). Conner and its subsidiaries
are in compliance with the terms of the Conner Permits, except where the failure
to so comply could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Conner has made available to Seagate a correct and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Conner with the Securities and Exchange Commission ("SEC") on
or after January 1, 1992 and prior to the date of this Agreement (the "Conner
SEC Reports"), which are all the forms, reports and documents required to be
filed by Conner with the SEC since January 1, 1992. The Conner SEC Reports
(A) were prepared in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (B) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of Conner's subsidiaries is
required to file any reports or other documents with the SEC.
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(b) Each set of consolidated financial statements (including, in
each case, any related notes thereto) contained in the Conner SEC Reports was
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and each fairly presents the consolidated
financial position of Conner and its subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to adjustments which were not or are not expected to be material
in amount.
(c) Conner has previously furnished to Seagate a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Conner with the SEC
pursuant to the Securities Act or the Exchange Act.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
Conner and its subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been (i) any Material Adverse Effect or (ii) any material change by
Conner in its accounting methods, principles or practices except as required by
concurrent changes in GAAP.
3.9 NO UNDISCLOSED LIABILITIES. Neither Conner nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Conner and its subsidiaries taken as a
whole, except liabilities (i) provided for in Conner's balance sheet as of
December 31, 1994, or (ii) incurred since December 31, 1994 in the ordinary
course of business, none of which are material to the business, results of
operations or financial condition of Conner and its subsidiaries, taken as a
whole.
3.10 ABSENCE OF LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the best knowledge of Conner, threatened (or, to the
best knowledge of Conner, any investigation pending or threatened) against
Conner or any of its subsidiaries, or any properties or rights of Conner or any
of its subsidiaries, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
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3.11 EMPLOYEE BENEFIT PLANS.
(a) Section 3.11 of the Conner Disclosure Letter lists, with
respect to Conner, any trade or business (whether or not incorporated) which is
treated as a single employer with Conner (an "ERISA Affiliate") within the
meaning of Section 414(b), (c), (m) or (o) of the Code or any subsidiary of
Conner (i) all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (ii) all
loans to employees in excess of $100,000, loans to officers, and any stock
option, stock purchase, phantom stock, stock appreciation right, supplemental
retirement, severance, material bonus, material deferred compensation and
material incentive plans, programs or arrangements, (iii) other fringe or
employee benefit plans, programs or arrangements that apply to senior management
of Conner and that do not generally apply to all employees, and (iv) any current
or former employment or executive compensation or severance agreements, written
or otherwise, as to which unsatisfied obligations of Conner of greater than
$50,000 remain for the benefit of, or relating to, any employee, consultant or
director of Conner (together, the plans and arrangements described in (i)
through (iv) above are referred to as the "Conner Employee Plans"), and a copy
of each such Conner Employee Plan and each summary plan description and annual
report on the Form 5500 series required to be filed with any government agency
for each Conner Employee Plan for the three most recent Plan years has been made
available to Seagate.
(b) (i) None of the Conner Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person; (ii) there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any Conner Employee Plan,
which could reasonably be expected to have, in the aggregate, a Material Adverse
Effect; (iii) all Conner Employee Plans have been administered in compliance
with the requirements prescribed by any and all statutes (including ERISA and
the Code, orders, or governmental rules and regulations currently in effect with
respect thereto (including all applicable requirements for notification to
participants or the Department of Labor, Internal Revenue Service or Secretary
of the Treasury)), except as would not have, in the aggregate, a Material
Adverse Effect and Conner and each of its subsidiaries have performed all
obligations required to be performed by them under, are not in any material
respect in default under or violation of, and have no knowledge of any material
default or violation by any other party to, any of the Conner Employee Plans;
(iv) each Conner Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code so
qualifies; (v) all material contributions required to be made by Conner or any
of its subsidiaries to any Conner Employee Plan have been made on or before
their due dates and a reasonable amount has been accrued for contributions to
each Conner Employee Plan for the current plan years; (vi) with respect to each
Conner Employee Plan, no "reportable event" within the meaning of Section 4043
of ERISA (excluding any such event for which the thirty (30) day notice
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requirement has been waived under the regulations to Section 4043 of ERISA) nor
any event described in Section 4062, 4063 or 4041 of ERISA has occurred; and
(vii) no Conner Employee Plan is covered by, and neither Conner nor any
subsidiary has incurred or expects to incur any liability under Title IV of
ERISA or Section 412 of the Code.
(c) With respect to each Conner Employee Plan, Conner has complied
with the applicable health care continuation and notice provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 and the proposed
regulations thereunder, except to the extent that a failure to comply would not
have a Material Adverse Effect.
(d) There are no Conner Employee Plans that provide for benefits
to vest, accrue or become payable upon the occurrence of the events described in
this Agreement.
3.12 LABOR MATTERS. (i) There are no controversies pending or, to the
best knowledge of each of Conner and its respective subsidiaries, threatened,
between Conner or any of its subsidiaries and any of their respective employees,
which controversies have or could reasonably be expected to have a Material
Adverse Effect; (ii) as of the date of this Agreement, neither Conner nor any of
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by Conner or its subsidiaries nor
does Conner or its subsidiaries know of any activities or proceedings of any
labor union to organize any such employees (A) as of the date of this Agreement
and (B) which, as of the Closing Date, have or could reasonably be expected to
have a Material Adverse Effect on Conner and its subsidiaries; and (iii) as of
the date of this Agreement, neither Conner nor any of its subsidiaries has any
knowledge of any strikes, slowdowns, work stoppages or lockouts, or threats
thereof, by or with respect to any employees of Conner or any of its
subsidiaries (X) as of the date of this Agreement and (Y) which, as of the
Closing Date, have or could reasonably be expected to have a Material Adverse
Effect on Conner and its subsidiaries.
3.13 REGISTRATION STATEMENT; PROXY STATEMENT. None of the information
supplied or to be supplied by Conner for inclusion or incorporation by reference
in (i) the registration statement on Form S-4 to be filed with the SEC by
Seagate in connection with the issuance of the Seagate Common Stock in or as a
result of the Merger (the "S-4") will, at the time the S-4 becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading; and (ii) the Proxy Statement (the "Proxy
Statement") to be filed with the SEC by Seagate and Conner pursuant to
Section 5.4 hereof will, at the dates mailed to the stockholders of Seagate and
Conner, at the times of the stockholders meetings of Seagate and Conner (each a
"Stockholders Meeting" and collectively, the "Stockholders Meetings") in
connection with the transactions contemplated hereby and as of the Effective
Time, contain
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any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder.
3.14 RESTRICTIONS ON BUSINESS ACTIVITIES. Other than as may be permitted
under Section 5.9, there is no material agreement, judgment, injunction, order
or decree binding upon Conner or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of Conner or any of its subsidiaries, any acquisition of
property by Conner or any of its subsidiaries or the conduct of business by
Conner or any of its subsidiaries as currently conducted.
3.15 TITLE TO PROPERTY. Conner owns no material real property. Conner
and each of its subsidiaries have good and defensible title to all of their
material properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby or
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect; and all leases pursuant to which Conner or any
of its subsidiaries lease from others material amounts of real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
material default or event of default (or any event which with notice or lapse of
time, or both, would constitute a material default and in respect of which
Conner or subsidiary has not taken adequate steps to prevent such default from
occurring) except where the lack of such good standing, validity and
effectiveness or the existence of such default or event of default could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. All the plants, structures and equipment of Conner and its
subsidiaries, except such as may be under construction, are in good operating
condition and repair, except where the failure of such plants, structures and
equipment to be in such good operating condition and repair could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
3.16 TAXES. Conner and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Conner or any of
its subsidiaries is or has been a member has timely filed all Tax Returns
required to be filed by it (other than those that are not, individually or in
the aggregate, material), has paid all Taxes shown thereon to be due and has
provided adequate accruals in all material respects in accordance with GAAP in
its financial statements for any Taxes that have not been paid, whether or not
shown as being due on any returns. In addition, (i) no material claim for
unpaid Taxes has become a lien against the property of Conner or any of its
subsidiaries or is being asserted
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against Conner or any of its subsidiaries, (ii) no audit of any Tax Return of
Conner or any of its subsidiaries is being conducted by a Tax authority (A) as
of the date of this Agreement and (B) which, as of the Closing Date, has not had
and could not reasonably be expected to have a Material Adverse Effect on Conner
and its subsidiaries, (iii) no extension of the statute of limitations on the
assessment of any Taxes has been granted by Conner or any of its subsidiaries
and is currently in effect (A) as of the date of this Agreement and (B) which,
as of the Closing Date, has not had and could not reasonably be expected to have
a Material Adverse Effect on Conner and its subsidiaries and (iv) there is no
agreement, contract or arrangement to which Conner or any of its subsidiaries is
a party that may result in the payment of any amount that would not be
deductible pursuant to Sections 280G, 162 or 404 of the Code. As used herein,
"Taxes" shall mean all taxes of any kind, including, without limitation, those
on or measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "Tax Return" shall mean any return, report or statement required
to be filed with any governmental authority with respect to Taxes.
3.17 ENVIRONMENTAL MATTERS. Except in all cases as, in the aggregate,
have not had and could not reasonably be expected to have a Material Adverse
Effect, Conner and each of its subsidiaries to their respective best knowledge
(i) have obtained all applicable permits, licenses and other authorizations
which are required under Federal, state or local laws relating to pollution or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or hazardous or
toxic materials or wastes into ambient air, surface water, ground water, or land
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants, contaminants
or hazardous or toxic materials or wastes by Conner or its subsidiaries (or
their respective agents); (ii) are in compliance with all terms and conditions
of such required permits, licenses and authorizations, and also are in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder;
(iii) as of the date hereof, are not aware of nor have received notice of any
event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to interfere with or prevent continued compliance or
which would give rise to any common law or statutory liability, or otherwise
form the basis of any claim, action, suit or proceeding, based on or resulting
from Conner's or any of its subsidiaries (or any of their respective agents)
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, or release into the
environment, of any pollutant, contaminant, or hazardous or toxic material or
waste; and
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(iv) have taken all actions necessary under applicable requirements of Federal,
state or local laws, rules or regulations to register any products or materials
required to be registered by Conner or its subsidiaries (or any of their
respective agents) thereunder.
3.18 BROKERS. No broker, finder or investment banker (other than
Goldman, Sachs & Co. ("Goldman Sachs")) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Conner.
3.19 INTELLECTUAL PROPERTY.
(a) Conner and its subsidiaries own, or have the right to use,
sell or license all material intellectual property rights necessary or required
for the conduct of their respective businesses as presently conducted (such
intellectual property rights are collectively referred to as the "Conner IP
Rights");
(b) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not constitute a
material breach of any instrument or agreement governing any Conner IP Right
(the "Conner IP Rights Agreements"), will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any Conner
IP Right or materially impair the right of Conner and its subsidiaries or the
Surviving Corporation to use, sell or license any Conner IP Right or portion
thereof (except where such breaches, forfeitures or terminations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect);
(c) neither the manufacture, marketing, license, sale or intended
use of any product currently licensed or sold by Conner or any of its
subsidiaries or currently under development by Conner or any of its subsidiaries
violates any license or agreement between Conner or any of its subsidiaries and
any third party or infringes any intellectual property right of any other party;
and there is no pending or, to the best knowledge of Conner, threatened claim or
litigation contesting the validity, ownership or right to use, sell, license or
dispose of any Conner IP Right nor, to the best knowledge of Conner, is there
any basis for any such claim, nor has Conner received any notice asserting that
any Conner IP Right or the proposed use, sale, license or disposition thereof
conflicts or will conflict with the rights of any other party, nor, to the best
knowledge of Conner, is there any basis for any such assertion, except to the
extent that such violation(s), or notice or basis therefor, have not had and
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; and
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(d) Conner has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all material Conner IP Rights.
3.20 POOLING MATTERS. Neither Conner nor any of its affiliates has, to
its best knowledge and based upon consultation with its independent auditors,
taken or agreed to take any action that (without giving effect to this
Agreement, the transactions contemplated hereby or actions related thereto, or
any action taken or agreed to be taken by Seagate or any of its affiliates)
would prevent Seagate from accounting for the business combination to be
effected by the Merger as a pooling of interests.
3.21 CONNER RIGHTS AGREEMENT. Conner will amend prior to the Effective
Time, the Conner Rights Agreement to the extent necessary to provide that the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby will not (i) cause Seagate or any of its affiliates to
become an Acquiring Person (as defined in the Conner Rights Agreement), or (ii)
otherwise affect the rights of the holders of Conner Rights, including by
causing such Conner Rights to separate from the underlying shares or by giving
such holders the right to acquire securities of any party hereto.
3.22 INSURANCE. Conner maintains insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of Conner and its subsidiaries (collectively, the
"Insurance Policies") which are of the type and in amounts customarily carried
by persons conducting businesses similar to those of Conner and its
subsidiaries. There is no material claim by Conner or any of its subsidiaries
pending under any of the material Insurance Policies as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds.
3.23 OPINION OF FINANCIAL ADVISOR. Conner has been advised in writing by
its financial advisor, Goldman Sachs, that in its opinion, as of the date of
this Agreement, the Exchange Ratio is fair to the stockholders of Conner.
3.24 BOARD APPROVAL. The Board of Directors of Conner has, as of the
date of this Agreement (i) approved this Agreement, the Merger Agreement and the
Conner Option Agreement and the transactions contemplated hereby and thereby,
(ii) determined that the Merger is in the best interests of the stockholders of
Conner and is on terms that are fair to such stockholders and (iii) recommended
that the stockholders of Conner approve this Agreement, the Merger Agreement and
the Merger.
3.25 VOTE REQUIRED. The affirmative vote of a majority of the votes that
holders of the outstanding shares of Conner Common Stock are entitled to vote
thereon is the only vote
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of the holders of any class or series of Conner's capital stock necessary to
approve this Agreement and the Merger Agreement and the transactions
contemplated hereby and thereby.
3.26 SECTION 203 OF THE DELAWARE STATUTE NOT APPLICABLE. The provisions
of Section 203 of the Delaware Statute will not, prior to the termination of
this Agreement, assuming the accuracy of the representation of Seagate given in
Section 4.27 (without giving effect to the knowledge qualification thereof),
apply to this Agreement or to the transactions contemplated hereby.
3.27 CONNER OWNERSHIP OF SEAGATE COMMON STOCK; SEAGATE NOT AN ACQUIRING
PERSON. Conner and, to the best knowledge of Conner, its "affiliates" and
"associates" (as defined under both Section 203 of the Delaware Statute and
Rule 405 under the Securities Act) collectively beneficially own and have
beneficially owned at all times during the three-year period prior to the date
hereof less than 1% of the shares of Seagate Common Stock outstanding. So long
as Seagate's and Sub's representations set forth in the first sentence of
Section 4.27 are accurate (without giving effect to the knowledge qualification
thereof) neither the execution and delivery of this Agreement by the parties
hereto nor the consummation by Seagate and Sub of the transactions contemplated
hereby will cause Seagate or any of its affiliates to be within the definition
of "Acquiring Person" (as such term is defined in the Conner Rights Agreement).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SEAGATE AND SUB
Seagate and Sub jointly and severally represent and warrant to Conner,
except as set forth in the Seagate SEC Reports (as defined in Section 4.7(a)) or
the disclosure letter delivered by Seagate and Sub to Conner on or prior to the
date of this Agreement (the "Seagate Disclosure Letter"), as follows:
4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Seagate and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
Seagate and its subsidiaries is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
have such Approvals would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below). Each of Seagate and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where
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the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect.
When used in connection with Seagate or any of its subsidiaries, the term
"Material Adverse Effect" means any change, event or effect that is materially
adverse to the business, assets (including intangible assets), liabilities,
financial condition or results of operations of Seagate and its subsidiaries
taken as a whole; PROVIDED, HOWEVER, that a "Material Adverse Effect" shall not
include any adverse effect on the revenues or gross margins of Seagate (or the
direct consequences thereof) following the date of this Agreement which are
attributable to (i) a delay of, reduction in or cancellation or the change in
the terms of product orders by customers of Seagate or (ii) an increase in the
price of, a delay of, reduction in or cancellation of or change in terms with
respect to products or components supplied by vendors of Seagate, which in
either case are attributable to the transactions contemplated by this Agreement.
Other than wholly-owned subsidiaries and except as permitted after the date of
this Agreement under Section 5.2 of this Agreement, Seagate does not directly or
indirectly own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business, association or
entity.
4.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Seagate has previously
furnished to Conner a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date. Such Certificate of Incorporation,
Bylaws and equivalent organizational documents of each of its subsidiaries are
in full force and effect. Neither Seagate nor any of its subsidiaries is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent organizational documents.
4.3 CAPITALIZATION. The authorized capital stock of Seagate consists of
(i) 200,000,000 shares of Seagate Common Stock and of (ii) 1,000,000 shares of
Preferred Stock, par value $.01 per share ("Seagate Preferred Stock"), 800,000
of which have been designated as Seagate Series A Preferred. At the close of
business on September 1, 1995, (i) 72,637,095 shares of Seagate Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) 209,410 shares of Seagate Common Stock were held in treasury
by Seagate or by subsidiaries of Seagate, (iii) 2,366,695 shares of Seagate
Common Stock were reserved for future issuance pursuant to Seagate's employee
stock purchase plan, (iv) 8,000,303 shares of Seagate Common Stock were reserved
for issuance upon the exercise of outstanding options ("Seagate Options") to
purchase Seagate Common Stock, 7,135,532 shares of Seagate Common Stock were
reserved for future grant under the 1991 Incentive Stock Option Plan (including
6,000,000 shares subject to stockholder approval at the 1995 Annual Meeting of
Stockholders to be held October 26, 1995), 550,000 shares of Seagate Common
Stock were reserved for future grant under the Directors' Option Plan and no
shares of Seagate Common Stock were reserved for future
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grant under the 1984 Stock Option Plan, (v) 6,278,071 shares and 10,314,286
shares were reserved for future issuance upon conversion of Seagate's 6 3/4%
Convertible Subordinated Debentures Due 2012 and 5% Convertible Subordinated
Debentures Due 2003, respectively (collectively the "Seagate Debentures"). No
change in such capitalization has occurred between September 1, 1995 and the
date hereof except issuances of Seagate Common Stock that would be permitted
pursuant to Section 5.2(c) hereof. As of the date hereof, no shares of Seagate
Preferred Stock were issued or outstanding. The authorized capital stock of Sub
consists of 1,000 shares of common stock, par value $0.001 per share, 100 shares
of which, as of the date hereof, are issued and outstanding. All of the
outstanding shares of Seagate's and Sub's respective capital stock have been
duly authorized and validly issued and are fully paid and nonassessable. Except
as set forth in this Section 4.3, as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Seagate or any
of its subsidiaries or obligating Seagate or any of its subsidiaries to issue or
sell any shares of capital stock of, or other equity interests in, Seagate or
any of its subsidiaries. All shares of Seagate Common Stock subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall, and the shares of
Seagate Common Stock to be issued pursuant to the Merger will be, duly
authorized, validly issued, fully paid and nonassessable. Except for such
actions as are permitted under Section 5.2, there are no obligations, contingent
or otherwise, of Seagate or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of Seagate Common Stock or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such subsidiary or any other entity
other than guarantees of obligations of subsidiaries entered into in the
ordinary course of business. All of the outstanding shares of capital stock
(other than directors' qualifying shares) of each of Seagate's subsidiaries is
duly authorized, validly issued, fully paid and nonassessable and all such
shares (other than directors' qualifying shares) are owned by Seagate or another
subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in Seagate's voting rights, charges or other
encumbrances of any nature whatsoever.
4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Seagate and Sub has
all necessary corporate power and authority to execute and deliver this
Agreement and the Conner Option Agreement, and to perform its obligations
hereunder and thereunder, subject to obtaining the approval of Seagate's
stockholders of the issuance of Seagate Common Stock in the Merger, to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Conner Option Agreement by Seagate and Sub
and the consummation by Seagate and Sub of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of Seagate and Sub and no other corporate proceedings on the
part of Seagate or Sub are necessary to authorize this Agreement and the Conner
Option Agreement, or to consummate
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the transactions so contemplated (other than with respect to the Merger, the
approval by the holders of a majority of the outstanding shares of Seagate
Common Stock of the issuance of Seagate Common Stock in the Merger in accordance
with the applicable rules of the NYSE and Seagate's Certificate of Incorporation
and Bylaws). This Agreement and the Conner Option Agreement have been duly and
validly executed and delivered by Seagate and Sub and, assuming the due
authorization, execution and delivery by Conner, constitute legal and binding
obligations of Seagate and Sub, enforceable against Seagate and Sub in
accordance with their respective terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors rights generally and (ii) the availability of injunctive relief and
other equitable remedies. The Merger Agreement, when executed and delivered by
Sub as contemplated hereby, will be duly executed and delivered by Sub and when
approved by the stockholders of Seagate and assuming the due authorization,
execution and delivery by Sub, will be the valid and binding obligation of Sub
enforceable against Sub in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to creditors rights generally and (ii) the availability of injunctive
relief and other equitable remedies.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Seagate and
Sub and the Conner Option Agreement by Seagate do not, and the performance of
this Agreement by Seagate and Sub and the Conner Option Agreement by Seagate
shall not, (i) conflict with or violate the Certificate of Incorporation, Bylaws
or equivalent organizational documents of Seagate or any of its subsidiaries,
(ii) subject to obtaining Seagate's stockholders approval of the issuance of the
shares of Seagate Common Stock in the Merger and compliance with the
requirements set forth in Section 4.5(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Seagate or any of
its subsidiaries or by which it or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Seagate's or any such subsidiary's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Seagate
or any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Seagate or any of its subsidiaries is a party
or by which Seagate or any of its subsidiaries or its or any of their respective
properties are bound or affected, except for any such breaches, defaults or
other occurrences that could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. The Seagate Disclosure Letter
lists all material consents, waivers and approvals under any of Seagate's or any
of its subsidiaries' agreements, contracts, licenses or leases required to be
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obtained in connection with the consummation of the transactions contemplated by
this Agreement and the Conner Option Agreement.
(b) The execution and delivery of this Agreement by Seagate and
Sub and the Conner Option Agreement by Seagate do not, and the performance of
this Agreement by Seagate and Sub shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, Blue Sky Laws, the pre-merger notification requirements of the
HSR Act and of foreign governmental entities and the rules and regulations
thereunder, the NYSE rules and regulations, and the filing and recordation of
the Merger Agreement as required by the Delaware Statute and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, (i) would not prevent consummation of the
Merger or otherwise prevent Seagate or Sub from performing their respective
obligations under this Agreement or (ii) could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.6 COMPLIANCE; PERMITS.
(a) Neither Seagate nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to Seagate or any of its subsidiaries or by which
its or any of their respective properties is bound or affected, or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Seagate or any of its
subsidiaries is a party or by which Seagate or any of its subsidiaries or its or
any of their respective properties is bound or affected, except for any such
conflicts, defaults or violations which could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. To the best
knowledge of Seagate, no investigation or review by any governmental or
regulatory body or authority is pending or threatened against Seagate or any of
its subsidiaries, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same, other than, in each such case, those
the outcome of which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) Seagate and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to the operation of the business of Seagate and its subsidiaries
taken as a whole (collectively, the "Seagate Permits"). Seagate and its
subsidiaries are in compliance with the terms of the Seagate Permits, except
where the failure to so comply could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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4.7 SEC FILINGS; FINANCIAL STATEMENTS.
Seagate has made available to Conner a correct and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Seagate with the SEC on or after January 1, 1992 and prior to
the date of this Agreement (the "Seagate SEC Reports"), which are all the forms,
reports and documents required to be filed by Seagate with the SEC since
January 1, 1992. The Seagate SEC Reports (A) were prepared in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (B) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of Seagate's subsidiaries is required to file any reports or
other documents with the SEC.
(b) Each set of consolidated financial statements (including, in
each case, any related notes thereto) contained in the Seagate SEC Reports was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and each
fairly presents the consolidated financial position of Seagate and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to adjustments which
were not or are not expected to be material in amount.
(c) Seagate has previously furnished to Conner a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Seagate with the SEC
pursuant to the Securities Act or the Exchange Act.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1995, Seagate
and its subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since such date, there has
not been (i) any Material Adverse Effect or (ii) any material change by Seagate
in its accounting methods, principles or practices except as required by
concurrent changes in GAAP.
4.9 NO UNDISCLOSED LIABILITIES. Neither Seagate nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Seagate and its subsidiaries taken as a
whole, except liabilities (i) provided for in Seagate's balance sheet as of
June 30, 1995 or
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(ii) incurred since June 30, 1995 in the ordinary course of business, none of
which are material to the business, results of operations or financial condition
of Seagate and its subsidiaries, taken as a whole.
4.10 ABSENCE OF LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the best knowledge of Seagate, threatened (or to the
best knowledge of Seagate, any investigation pending or threatened) against
Seagate or any of its subsidiaries, or any properties or rights of Seagate or
any of its subsidiaries, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
4.11 EMPLOYEE BENEFIT PLANS.
(a) Section 4.11 of the Seagate Disclosure Letter lists, with
respect to Seagate, any trade or business (whether or not incorporated) which is
treated as a single employer with Seagate (an "ERISA Affiliate") within the
meaning of Section 414(b), (c), (m) or (o) of the Code, or any subsidiary of
Seagate (i) all employee benefit plans (as defined in Section 3(3) of ERISA),
(ii) all loans to employees in excess of $100,000, loans to officers, and any
stock option, stock purchase, phantom stock, stock appreciation right, deferred
compensation, supplemental retirement, severance, material bonus, material
incentive and material deferred compensation plans, programs or arrangements,
and (iii) other fringe or employee benefit plans, programs or arrangements that
apply to senior management of Seagate and that do not generally apply to all
employees, for the benefit of, or relating to, any employee, consultant or
director of Seagate, (together, the plans and arrangements described in (i)
through (iii) above are referred to as the "Seagate Employee Plans"), and a copy
of each such Seagate Employee Plan and each summary plan description, and annual
report on the Form 5500 series required to be filed with any government agency
for each Seagate Employee Plan for the three most recent Plan years, and the
most recent actuarial report, plan committee meeting minutes and trustee's
reports has been made available to Conner.
(b) (i) None of the Seagate Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person; (ii) there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any Seagate Employee Plan,
which could reasonably be expected to have, in the aggregate, a Material Adverse
Effect; (iii) all Seagate Employee Plans have been administered in compliance
with the requirements prescribed by any and all statutes (including ERISA and
the Code, orders, or governmental rules and regulations currently in effect with
respect thereto (including all applicable requirements for notification to
participants or the Department of Labor, Internal Revenue Service or Secretary
of the
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Treasury)), except as would not have, in the aggregate, a Material Adverse
Effect and Seagate and each of its subsidiaries have performed all obligations
required to be performed by them under, are not in any material respect in
default under or violation of, and have no knowledge of any material default or
violation by any other party to, any of the Seagate Employee Plans; (iv) each
Seagate Employee Plan intended to qualify under Section 401(a) of the Code and
each trust intended to qualify under Section 501(a) of the Code so qualifies;
(v) all material contributions required to be made by Seagate or any of its
Seagate subsidiaries to any Seagate Employee Plan have been made on or before
their due dates and a reasonable amount has been accrued for contributions to
each Seagate Employee Plan for the current plan years; (vi) with respect to each
Seagate Employee Plan, no "reportable event" within the meaning of Section 4043
of ERISA (excluding any such event for which the thirty (30) day notice
requirement has been waived under the regulations to Section 4043 of ERISA) nor
any event described in Section 4062, 4063 or 4041 of ERISA has occurred; and
(vii) no Seagate Employee Plan is covered by, and neither Seagate nor any
subsidiary has incurred or expects to incur any liability under Title IV of
ERISA or Section 412 of the Code.
(c) With respect to each Seagate Employee Plan, Seagate has
complied with the applicable health care continuation and notice provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985 and the proposed
regulations thereunder, except to the extent that a failure to comply would not
have a Material Adverse Effect.
(d) There are no Seagate Employee Plans that provide for benefits
to vest, accrue or become payable upon the occurrence of the events described in
this Agreement.
4.12 LABOR MATTERS. (i) There are no controversies pending or, to the
best knowledge of each of Seagate and its respective subsidiaries, threatened,
between Seagate or any of its subsidiaries and any of their respective
employees, which controversies have or could reasonably be expected to have a
Material Adverse Effect; (ii) as of the date of this Agreement, neither Seagate
nor any of its subsidiaries is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by Seagate or its
subsidiaries nor does Seagate or its subsidiaries know of any activities or
proceedings of any labor union to organize any such employees (A) as of the date
of this Agreement and (B) which, as of the Closing Date, have or could
reasonably be expected to have a Material Adverse Effect on Seagate and its
subsidiaries; and (iii) as of the date of this Agreement, neither Seagate nor
any of its subsidiaries has any knowledge of any strikes, slowdowns, work
stoppages or lockouts, or threats thereof, by or with respect to any employees
of Seagate or any of its subsidiaries (X) as of the date of this Agreement and
(Y) which, as of the Closing Date, have or could reasonably be expected to have
a Material Adverse Effect on Seagate and its subsidiaries.
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4.13 REGISTRATION STATEMENT; PROXY STATEMENT. None of the information
supplied or to be supplied by Seagate for inclusion or incorporation by
reference (i) in the S-4 will, at the time the S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading; and (ii) the Proxy Statement will, at the dates mailed to the
stockholders of Seagate and Conner, at the times of the Stockholders Meetings
and as of the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder, and the S-4 will comply as to
form in all material respects with the provisions of the Securities Act and the
rules and regulations promulgated by the SEC thereunder.
4.14 RESTRICTIONS ON BUSINESS ACTIVITIES. Other than as may be permitted
under Section 5.9, there is no material agreement, judgment, injunction, order
or decree binding upon Seagate or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of Seagate or any of its subsidiaries, any acquisition of
property by Seagate or any of its subsidiaries or the conduct of business by
Seagate or any of its subsidiaries as currently conducted.
4.15 TITLE TO PROPERTY. Seagate owns no material real property. Seagate
and each of its subsidiaries have good and defensible title to all of their
material properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby or
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect; and all leases pursuant to which Seagate or any
of its subsidiaries lease from others material amounts of real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
material default or event of default (or any event which with notice or lapse of
time, or both, would constitute a material default and in respect of which
Seagate or its subsidiary has not taken adequate steps to prevent such default
from occurring) except where the lack of such good standing, validity and
effectiveness or the existence of such default or event of default could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. All the plants, structures and equipment of Seagate and its
subsidiaries, except such as may be under construction, are in good operating
condition and repair, except where the failure of such plants, structures and
equipment to be in such good operating condition and repair could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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4.16 TAXES. Seagate and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Seagate or any of
its subsidiaries is or has been a member has timely filed all Tax Returns
required to be filed by it (other than those that are not, individually or in
the aggregate, material), has paid all Taxes shown thereon to be due and has
provided adequate accruals in all material respects in accordance with GAAP in
its financial statements for any Taxes that have not been paid, whether or not
shown as being due on any returns. In addition, (i) no material claim for
unpaid Taxes has become a lien against the property of Seagate or any of its
subsidiaries or is being asserted against Seagate or any of its subsidiaries,
(ii) no audit of any Tax Return of Seagate or any of its subsidiaries is being
conducted by a Tax authority (A) as of the date of this Agreement and (B) which,
as of the Closing Date, has not had and could not reasonably be expected to
have, a Material Adverse Effect on Seagate and its subsidiaries, (iii) no
extension of the statute of limitations on the assessment of any Taxes has been
granted by Seagate or any of its subsidiaries and is currently in effect (A) as
of the date of this Agreement and (B) which, as of the Closing Date, has not had
and could not reasonably be expected to have a Material Adverse Effect on
Seagate and its subsidiaries and (iv) there is no agreement, contract or
arrangement to which Seagate or any of its subsidiaries is a party that may
result in the payment of any amount that would not be deductible pursuant to
Sections 280G, 162 or 404 of the Code.
4.17 ENVIRONMENTAL MATTERS. Except in all cases as, in the aggregate,
have not had and could not reasonably be expected to have a Material Adverse
Effect, Seagate and each of its subsidiaries to their respective best knowledge
(i) have obtained all applicable permits, licenses and other authorizations
which are required under Federal, state or local laws relating to pollution or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or hazardous or
toxic materials or wastes into ambient air, surface water, ground water, or land
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants, contaminants
or hazardous or toxic materials or wastes by Seagate or its subsidiaries (or
their respective agents); (ii) are in compliance with all terms and conditions
of such required permits, licenses and authorizations, and also are in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder;
(iii) as of the date hereof, are not aware of and have not received notice of
any event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to interfere with or prevent continued compliance or
which would give rise to any common law or statutory liability, or otherwise
form the basis of any claim, action, suit or proceeding, based on or resulting
from Seagate's or any of its subsidiaries (or any of their respective agents)
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, or release into
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the environment, of any pollutant, contaminant, or hazardous or toxic material
or waste; and (iv) have taken all actions necessary under applicable
requirements of Federal, state or local laws, rules or regulations to register
any products or materials required to be registered by Seagate or its
subsidiaries (or any of their respective agents) thereunder.
4.18 BROKERS. No broker, finder or investment banker (other than Morgan
Stanley & Co., Incorporated ("Morgan Stanley")) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Seagate or Sub.
4.19 INTELLECTUAL PROPERTY.
(a) Seagate and its subsidiaries own, or have the right to use,
sell or license all material intellectual property rights necessary or required
for the conduct of their respective businesses as presently conducted (such
intellectual property rights are collectively referred to as the "Seagate IP
Rights");
(b) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not constitute a
material breach of any instrument or agreement governing any Seagate IP Right
(the "Seagate IP Rights Agreements"), will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any Seagate
IP Right or materially impair the right of Seagate and its subsidiaries or the
Surviving Corporation to use, sell or license any Seagate IP Right or portion
thereof (except where such breaches, forfeitures or terminations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect);
(c) neither the manufacture, marketing, license, sale or intended
use of any product currently licensed or sold by Seagate or any of its
subsidiaries or currently under development by Seagate or any of its
subsidiaries violates any license or agreement between Seagate or any of its
subsidiaries and any third party or infringes any intellectual property right of
any other party; and there is no pending or, to the best knowledge of Seagate,
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any Seagate IP Right nor, to the best knowledge
of Seagate, is there any basis for any such claim, nor has Seagate received any
notice asserting that any Seagate IP Right or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any other
party, nor, to the best knowledge of Seagate, is there any basis for any such
assertion, except to the extent that such violation(s), or notice or basis
therefor, have not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; and
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(d) Seagate has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all material Seagate IP Rights.
4.20 POOLING MATTERS. Neither Seagate nor any of its affiliates has, to
its best knowledge and based upon consultation with its independent auditors,
taken or agreed to take any action that (without giving effect to this
Agreement, the transactions contemplated hereby or actions related thereto, or
any action taken or agreed to be taken by Conner or any of its affiliates) would
prevent Seagate from accounting for the business combination to be effected by
the Merger as a pooling of interests.
4.21 INSURANCE. Seagate maintains insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of Seagate and its subsidiaries ("Seagate Insurance
Policies") which are of the type and in amounts customarily carried by persons
conducting businesses similar to those of Seagate and its subsidiaries. There
is no material claim by Seagate or any of its subsidiaries pending under any of
the material Seagate Insurance Policies.
4.22 OPINION OF FINANCIAL ADVISOR. Seagate has been advised in writing
by its financial advisor, Morgan Stanley, that in its opinion as of the date
hereof, the Exchange Ratio is fair, from a financial point of view, to Seagate.
4.23 BOARD APPROVAL. The Board of Directors of Seagate has, as of the
date hereof, (i) approved this Agreement, the Merger Agreement, the Conner
Option Agreement and the transactions contemplated hereby and thereby,
(ii) determined that the Merger is in the best interests of the stockholders of
Seagate and is on terms that are fair to such stockholders and (iii) recommended
that the stockholders of Seagate approve the issuance of Seagate Common Stock in
connection with the Merger.
4.24 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the shares of Seagate Common Stock present in person or represented by proxy at
the meeting of Seagate's stockholders contemplated by Section 5.8 (provided that
the shares so present or represented constitute a majority of the shares of
Seagate Common Stock) is the only vote of the holders of any class or series of
Seagate's capital stock necessary to approve the Merger and the issuance of
Seagate Common Stock in connection with the Merger.
4.25 INTERIM OPERATIONS OF SUB. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
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4.26 SECTION 203 OF THE DELAWARE STATUTE NOT APPLICABLE. The provisions
of Section 203 of the Delaware Statute will not, prior to the termination of
this Agreement, assuming the accuracy of the representation of Conner in Section
3.27 (without giving effect to the knowledge qualification thereof), apply to
this Agreement or to the transactions contemplated hereby.
4.27 SEAGATE OWNERSHIP OF CONNER COMMON STOCK. Seagate and, to the best
knowledge of Seagate, its "affiliates" and "associates" (as defined under both
Section 203 of the Delaware Statute and Rule 405 under the Securities Act),
collectively beneficially own and have beneficially owned at all times during
the three-year period prior to the date hereof less than 1% of the shares of
Conner Common Stock outstanding (other than shares of Conner Common Stock
issuable pursuant to the Conner Option Agreement to be entered into concurrently
herewith).
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME; ADDITIONAL AGREEMENTS
5.1 INFORMATION AND ACCESS. Subject to and in accordance with the terms
and conditions of that certain letter agreement dated July 17, 1995, between
Seagate and Conner (the "Confidentiality Agreement"), from the date of this
Agreement and continuing until the Effective Time, each Company shall afford
and, with respect to clause (b) below, such Company shall cause its independent
auditors to afford, (a) to the officers, independent auditors, counsel and other
representatives of the other Company reasonable access to the properties, books,
records (including Tax Returns filed and those in preparation) and personnel of
such Company and its subsidiaries in order that the other Company may have a
full opportunity to make such investigation as it reasonably desires to make of
such Company and its subsidiaries and (b) to the independent auditors of the
other Company, reasonable access to the audit work papers and other records of
the independent auditors of such Company and its subsidiaries. Additionally,
subject to and in accordance with the Confidentiality Agreement, each Company
and its subsidiaries will permit the other Company to make such reasonable
inspections of such Company and its subsidiaries and their respective operations
during normal business hours as the other Company may reasonably require and
each Company and its subsidiaries will cause its officers and the officers of
its subsidiaries to furnish the other Company with such financial and operating
data and other information with respect to the business and properties of such
Company and its subsidiaries as the other Company may from time to time
reasonably request. No investigation pursuant to this Section 5.1 shall affect
or otherwise obviate or diminish any representations and warranties of any party
or conditions to the obligations of any party.
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5.2 CONDUCT OF BUSINESS OF THE COMPANIES. Except as contemplated by
this Agreement, during the period from the date of this Agreement and continuing
until the Effective Time or until the termination of this Agreement pursuant to
Section 7.1, (i) each Company shall use reasonable efforts promptly to report to
the other on the status of operational matters and changes of materiality
(subject to the terms of the Confidentiality Agreement) and (ii) each Company
and its subsidiaries shall conduct their respective businesses in the ordinary
and usual course consistent with past practice and each Company and its
subsidiaries shall use reasonable efforts to maintain and preserve intact its
business organization, to keep available the services of its officers and
employees and to maintain satisfactory relations with licensors, franchisees,
licensees, suppliers, contractors, distributors, customers and others having
business relationships with it. Without limiting the generality of the
foregoing and except as provided in this Agreement, and except as disclosed in
Section 5.2 of the Conner Disclosure Letter, prior to the Effective Time,
neither Company nor any of its subsidiaries shall, unless this Agreement is
terminated pursuant to Section 7.1, without the prior written consent of the
other Company (which consent shall not be unreasonably withheld):
(a) declare, set aside or pay any dividends on or make any other
distribution in respect of any of its capital stock except (i) as permitted by
subsection (c) below and (ii) dividends or distributions by subsidiaries of
Seagate to Seagate or any subsidiary of Seagate;
(b) split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance or authorization of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
repurchase, redeem (except in compliance with Section 5.2(n) below) or otherwise
acquire any shares of its capital stock;
(c) issue, deliver, pledge, encumber or sell, or authorize or
propose the issuance, delivery, pledge, encumbrance or sale of, or purchase or
propose the purchase of, any shares of its capital stock or securities
convertible into, or rights, warrants or options to acquire, any such shares of
capital stock or other convertible securities (other than (i) the issuance of
such capital stock upon the exercise or conversion of Seagate Options, Seagate
Debentures, Conner Options (as defined in Section 5.14), Conner Debentures or
Arcada Options, as the case may be, outstanding on the date of this Agreement in
accordance with their present terms or pursuant to the Seagate Employee Stock
Purchase Plan or the Conner Employee Stock Purchase Plan, as the case may be, in
accordance with their present terms, (ii) the granting of Seagate Options in the
ordinary course of business consistent with past practice, pursuant to Seagate
Employee Plans in effect on the date of this Agreement, and the issuance of
Seagate Common Stock upon exercise thereof, (iii) the granting of Conner
Options to purchase up to an aggregate of 500,000 shares of Conner Common Stock
in the ordinary course of business consistent with past practice, pursuant to
Conner Employee Plans in effect on the date of this Agreement, the issuance of
Conner Common Stock upon
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the exercise of Conner Options, the granting of Arcada Options to purchase up to
an aggregate of 200,000 shares of Arcada Common Stock (plus shares of Arcada
Common Stock returned to the Arcada 1994 Stock Option Plan or Conner
Peripherals, Inc./Arcada Stock Option Plan (the "Conner Arcada Plan") (other
than 75,000 shares subject to an option awarded to James Steger on August 8,
1995) after the date of this Agreement upon termination of the employment of
optionees in the ordinary course of business consistent with past practice
(PROVIDED that (A) such Arcada options shall be granted only to employees of
Arcada (B) such Arcada Options shall only be granted at an exercise price per
share equal to 100% of the fair market value per share of Arcada Common Stock on
the date of grant as determined by the Board of Directors of the company
granting such option , (C) options granted under the Conner Arcada Plan shall
only be granted to employees of Arcada hired after June 19, 1995 and (D) any
persons to whom such options are granted shall acknowledge and agree in writing,
as a condition to the granting of such option, that such option may be converted
into the right to receive 0.1545 shares of Seagate Common Stock ), and the
issuance of Arcada Common Stock upon the exercise of Arcada Options outstanding
as of the date of this Agreement and (iv) in the case of Seagate only, the
issuance of Seagate Common Stock or other equity instruments in connection with
a Permitted Seagate Acquisition (as defined in clause (e) below)) or authorize
or propose any change in its equity capitalization;
(d) except as otherwise provided in this Agreement, amend its
Certificate of Incorporation or Bylaws or the Conner Rights Agreement in any
manner adverse to the other Company;
(e) acquire or agree to acquire by merging or consolidating with,
or by purchasing any material portion of the capital stock or assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, PROVIDED that Seagate shall be
permitted to acquire (i) any rigid disc drive component business (but not a
rigid disc drive business) for consideration having a fair market value of $50
million or less or (ii) any software business for consideration having a fair
market value of $150 million or less (any such transaction is referred to as a
"Permitted Seagate Acquisition"); and, PROVIDED FURTHER, that Conner shall be
permitted to acquire two substrate businesses pursuant to the terms described
in the Conner Disclosure Letter (any such transaction is referred to as a
"Permitted Conner Acquisition").
(f) sell, lease, pledge or otherwise dispose of or encumber any of
its assets, except in the ordinary course of business (including, without
limitation, any indebtedness owed to it or any claims held by it);
(g) with respect to Conner only, transfer the stock of any
subsidiary to any other subsidiary or any assets or liabilities to any new or,
except in the ordinary course of
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business consistent with past practice, existing subsidiary, and except as set
forth in Section 5.2 of the Conner Disclosure Letter;
(h) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any of its debt securities or guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of others, or make loans or advances, other than (i) in the ordinary course of
business consistent with past practice, (ii) with respect to a business or other
entity acquired pursuant to a Permitted Seagate Acquisition or a Permitted
Conner Acquisition, and (iii) as set forth in Section 5.2 of the Conner
Disclosure Letter;
(i) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, contingent or otherwise), other than (i)
the payment, discharge or satisfaction of liabilities in the ordinary course of
business, (ii) the payment of the fees and expenses of counsel and financial
advisors relating to this Agreement and the transactions contemplated hereby,
(iii) with respect to Seagate only, any payment with respect to a settlement of
any of the outstanding litigation described in the Seagate SEC Reports and (iv)
any payment, discharge or satisfaction of any liabilities of any business or
other entity acquired pursuant to a Permitted Seagate Acquisition or a Permitted
Conner Acquisition;
(j) with respect to Conner only, adopt or amend in any material
respect any collective bargaining agreement or Conner Employee Plan, other than
in the ordinary course of business consistent with past practice; or with
respect to Conner only enter into or amend any employment, severance, special
pay arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees of
Conner (other than, with respect to key employees, employment terms consistent
with Conner's past practice), or enter into or amend any severance or
termination arrangement that provides for payments to any person different from
those contained in the Conner Disclosure Letter;
(k) change in any material respect the accounting methods or
practices followed by such Company, including any material change in any
assumption underlying, or method of calculating, any bad debt, contingency or
other reserve, except as may be required by changes in GAAP; make any material
Tax election or settle or compromise any material federal, state, local or
foreign income tax liability or agree to an extension of a statute of
limitations;
(l) enter into any material contract or agreement, except in the
ordinary course of business, other than as expressly permitted in this
Section 5.2 and other than renewals or replacements of leases scheduled to
expire in the near-term in the ordinary course of business;
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(m) with respect to Conner only, redeem any rights under the
Conner Rights Agreement or take any action which would permit an event (other
than the Merger or the transactions contemplated by the Conner Option Agreement)
which would otherwise be a "Triggering Event" under the Conner Rights Agreement
to be excluded from the definition of a "Triggering Event," other than in
connection with a Superior Proposal (as defined in Section 5.3) which the Board
of Directors of Conner shall approve or recommend in accordance with Section 5.3
or pursuant to Section 1(a)(ii) of the Conner Rights Agreement; or
(n) authorize or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Notwithstanding the foregoing, the parties understand that Seagate shall
have the right to enter into agreements with respect to and to consummate
Permitted Seagate Acquisitions, and Conner shall have the right to enter into
agreements with respect to and to consummate Permitted Conner Acquisitions.
Nothing contained in Section 5.2(a) to (n) above shall limit, prohibit or
restrict (i) Seagate's and its affiliates' ability to enter into agreements with
respect to and to consummate Permitted Seagate Acquisitions or to operate in the
ordinary course of business any business or other entity acquired pursuant to a
Permitted Seagate Acquisition or (ii) Conner's and its affiliates' ability to
enter into agreements with respect to and to consummate Permitted Conner
Acquisitions or to operate in the ordinary course of business any business or
other entity acquired pursuant to a Permitted Conner Acquisition.
5.3 NEGOTIATION WITH OTHERS.
(a) From and after the date of this Agreement until the earlier
of the Effective Time or the termination of this Agreement in accordance with
its terms, Conner shall not, directly or indirectly, through any officer,
director, employee, representative or agent of Conner or any of its
subsidiaries, solicit or encourage (including by way of furnishing nonpublic
information) or take other action, either directly or indirectly, to facilitate
any inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to an Acquisition Proposal (as defined below) from any
person, or engage in any discussions or negotiations relating thereto or in
furtherance thereof or accept any Acquisition Proposal. For purposes of this
Agreement, "Acquisition Proposal" means any inquiries or proposals regarding
(i) any merger, consolidation, sale of substantial assets or similar
transactions involving Conner or any subsidiaries of Conner (other than sales of
assets or inventory in the ordinary course of business), (ii) sale of 20% or
more of the outstanding shares of capital stock of Conner (including without
limitation by way of a tender offer or an exchange offer) or similar
transactions involving Conner or any subsidiaries of Conner, (iii) the
acquisition by any person of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined under
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Section 13(d) of the Exchange Act and the rules and regulations thereunder)
which beneficially owns, or has the right to acquire beneficial ownership of 20%
or more of the then outstanding shares of capital stock of Conner; or (iv) any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.
(b) Notwithstanding Section 5.3(a), the restrictions set forth in
this Agreement shall not prevent the Board of Directors of Conner, in the
exercise of and as required by its fiduciary duties as determined by the Board
of Directors of Conner after consultation with its outside legal counsel,
engaging in discussions or negotiations with, and furnishing information
concerning Conner and its business, properties and assets (but not directly or
indirectly soliciting or initiating such discussions or negotiations or directly
or indirectly encouraging inquiries or the making of any Acquisition Proposal),
to a third party who makes a written, unsolicited, bona fide Acquisition
Proposal that is reasonably capable of being consummated and is reasonably
likely to be financially superior to the Merger, as determined in each case in
good faith by Conner's Board of Directors after consultation with Conner's
financial advisors (a "Superior Proposal"), provided that Seagate shall have
been notified in writing of such Acquisition Proposal, including the principal
financial terms and conditions thereof.
Upon compliance with the foregoing, Conner shall be entitled to (1)
withdraw, modify or refrain from making its recommendation referred to in
Section 5.4 following receipt of a Superior Proposal, and approve and recommend
to the stockholders of Conner a Superior Proposal and (2) enter into an
agreement with such third party concerning a Superior Proposal provided that
Conner shall immediately make payment in full to Seagate of the Breakup Fee as
defined in Section 7.3 below.
(c) If Conner or any of its subsidiaries receives any unsolicited
offer or proposal to enter negotiations relating to an Acquisition Proposal,
Conner shall immediately notify Seagate thereof, including information as to the
identity of the offeror or the party making any such offer or proposal and the
principal financial terms and conditions of such offer or proposal, as the case
may be.
(d) Notwithstanding the foregoing, Conner shall not provide any
non-public information to a third party unless Conner provides such non-public
information pursuant to a nondisclosure agreement with terms regarding the
protection of confidential information at least as restrictive as such terms in
the nondisclosure agreement previously entered into between Seagate and Conner.
Conner shall be entitled to provide copies of this Section 5.3 to third parties
who, on an unsolicited basis after the date of this Agreement, contact Conner
regarding an Acquisition Proposal, provided that Seagate shall concurrently be
notified of such contact and delivery of such copy.
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(e) Conner shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Seagate and
Sub) conducted prior to the date of this Agreement with respect to any of the
foregoing.
5.4 PREPARATION OF S-4 AND THE PROXY STATEMENT; OTHER FILINGS. As
promptly as practicable after the date of this Agreement, Seagate and Conner
shall prepare and file with the SEC a preliminary Proxy Statement in form and
substance satisfactory to each of Seagate and Conner and Seagate shall prepare
and file with the SEC the S-4, in which the Proxy Statement will be included as
a prospectus. Each of Seagate and Conner shall use its reasonable efforts to
respond to any comments of the SEC, to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing and to cause the
Proxy Statement to be mailed to such Company's stockholders at the earliest
practicable time. As promptly as practicable after the date of this Agreement,
Seagate and Conner shall prepare and file any other filings required under the
Exchange Act, the Securities Act or any other Federal or Blue Sky Laws relating
to the Merger and the transactions contemplated by this Agreement and the Merger
Agreement, including, without limitation, under the HSR Act and state takeover
laws (the "Other Filings"). Each Company will notify the other Company promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff or any other government officials for amendments or
supplements to the S-4, the Proxy Statement or any Other Filing or for
additional information and will supply the other Company with copies of all
correspondence between such Company or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the S-4, the Proxy Statement, the Merger or any Other
Filing. The Proxy Statement, the S-4 and the Other Filings shall comply in all
material respects with all applicable requirements of law. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Proxy Statement, the S-4 or any Other Filing, Seagate or Conner, as the case may
be, shall promptly inform the other Company of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of Seagate and Conner, such amendment or supplement.
The Proxy Statement shall include the recommendations of the Board of Directors
of Seagate in favor of the issuance of Seagate Common Stock in connection with
the Merger and of the Board of Directors of Conner in favor of the Merger,
provided that the recommendation of the Board of Directors of Conner may not be
included or may be withdrawn if previously included if the Board of Directors
of Conner has accepted a Superior Proposal in accordance with the terms of
Section 5.3.
5.5 ADVICE OF CHANGES; SEC FILINGS. Each Company shall promptly provide
the other Company (or its counsel) copies of all filings made by such Company
with any Governmental Entity in connection with this Agreement, the Merger
Agreement and the transactions contemplated hereby and thereby.
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5.6 LETTER OF CONNER'S INDEPENDENT AUDITORS. Conner shall use all
reasonable efforts to cause to be delivered to Seagate a letter of Price
Waterhouse, LLP, Conner's independent auditors, dated a date within two Business
Days before the date on which the S-4 shall become effective and addressed to
Seagate, in form and substance reasonably satisfactory to Seagate and customary
in scope and substance for letters delivered by independent auditors in
connection with registration statements similar to the S-4.
5.7 LETTER OF SEAGATE'S INDEPENDENT AUDITORS. Seagate shall use all
reasonable efforts to cause to be delivered to Conner a letter of Ernst & Young,
LLP, Seagate's independent auditors, dated a date within two Business Days
before the date on which the S-4 shall become effective and addressed to Conner,
in form and substance reasonably satisfactory to Conner and customary in scope
and substance for letters delivered by independent auditors in connection with
registration statements similar to the S-4.
5.8 STOCKHOLDERS MEETINGS. Seagate and Conner each shall call a meeting
of its respective stockholders to be held as promptly as practicable for the
purpose of voting upon, in the case of Seagate, the issuance of Seagate Common
Stock in connection with the Merger and, in the case of Conner, this Agreement
and the Merger Agreement. Seagate and Conner shall coordinate and cooperate
with respect to the timing of the Stockholders Meetings and shall use their
respective reasonable efforts to hold the Stockholders Meetings on the same day
as soon as practicable after the date of this Agreement.
5.9 AGREEMENTS TO TAKE REASONABLE ACTION.
(a) Conner shall take, and shall cause its subsidiaries to take,
all reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on Conner or its subsidiaries with respect to the Merger
(including furnishing the information required under the HSR Act) and shall take
all reasonable actions necessary to cooperate promptly with and furnish
information to Seagate in connection with any such requirements imposed upon
Seagate or Sub or any subsidiary of Seagate or Sub in connection with the
Merger. Conner shall take, and shall cause its subsidiaries to take, all
reasonable actions necessary (i) to obtain (and will take all reasonable actions
necessary to promptly cooperate with Seagate or Sub and their subsidiaries in
obtaining) any clearance, consent, authorization, order or approval of, or any
exemption by, any Governmental Entity, or other third party, required to be
obtained or made by Conner or any of its subsidiaries (or by Seagate or any of
its subsidiaries) in connection with the Merger or the taking of any action
contemplated by this Agreement; (ii) to lift, rescind or mitigate the effect of
any injunction or restraining order or other order adversely affecting the
ability of Conner to consummate the transactions contemplated hereby; (iii) to
fulfill all conditions applicable to Conner or Seagate pursuant to this
Agreement; and (iv) to prevent, with respect to a threatened or pending
temporary, preliminary or permanent injunction or other order, decree or ruling
or
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statute, rule, regulation or executive order, the entry, enactment or
promulgation thereof, as the case may be; PROVIDED, HOWEVER, that with respect
to clauses (i) through (iv) above, Conner and its subsidiaries will take only
such curative measures (such as licensing and divestiture) as Seagate
determines, in good faith, to be reasonable.
(b) Seagate and Sub shall take, and shall cause their subsidiaries
to take, all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on them or their subsidiaries with respect to
the Merger (including furnishing the information required under the HSR Act) and
shall take all reasonable actions necessary to cooperate promptly with and
furnish information to Conner in connection with any such requirements imposed
upon Conner or any subsidiary of Conner in connection with the Merger. Seagate
and Sub shall take, and shall cause their subsidiaries to take, all reasonable
actions necessary (i) to obtain (and will take all reasonable actions necessary
to promptly cooperate with Conner and its subsidiaries in obtaining) any
clearance, consent, authorization, order or approval of, or any exemption by,
any Governmental Entity, or other third party, required to be obtained or made
by Seagate or any of its subsidiaries (or by Conner or any of its subsidiaries)
in connection with the Merger or the taking of any action contemplated by this
Agreement; (ii) to lift, rescind or mitigate the effect of any injunction or
restraining order or other order adversely affecting the ability of Seagate or
Sub to consummate the transactions contemplated hereby; (iii) to fulfill all
conditions applicable to Seagate or Sub or Conner pursuant to this Agreement;
and (iv) to prevent, with respect to a threatened or pending temporary,
preliminary or permanent injunction or other order, decree or ruling or statute,
rule, regulation or executive order, the entry, enactment or promulgation
thereof, as the case may be; PROVIDED, HOWEVER, that with respect to clauses (i)
through (iv) above Seagate and its subsidiaries will take only such curative
measures (such as licensing and divestiture) as Seagate determines, in good
faith, to be reasonable.
(c) Subject to the terms and conditions of this Agreement, each of
the parties shall use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement,
subject to the appropriate approval of the stockholders of Seagate and Conner.
Seagate and Conner will use their reasonable best efforts to resolve any
competitive issues relating to or arising under the HSR Act or any other federal
or state antitrust or fair trade law raised by any Governmental Entity including
making offers of curative divestitures and/or licensing of technology which
Seagate determines, in good faith, to be reasonable. If such offers are not
accepted by such Governmental Entity, Seagate (with Conner's cooperation) shall
pursue all litigation resulting from such issues. The parties hereto will
consult and cooperate with one another, and consider in good faith the views of
one another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in
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connection with proceedings under or relating to the HSR Act or any other
federal or state antitrust or fair trade law.
5.10 CONSENTS. Seagate, Sub and Conner shall each use all reasonable
efforts to obtain the consent and approval of, or effect the notification of or
filing with, each person or authority whose consent or approval is required in
order to permit the consummation of the Merger and the transactions contemplated
by this Agreement and to enable the Surviving Corporation to conduct and operate
the business of Conner and its subsidiaries substantially as presently conducted
and as contemplated to be conducted.
5.11 NYSE LISTING. Seagate shall use its reasonable best efforts to
cause the shares of Seagate Common Stock issuable to the stockholders of Conner
in the Merger to be listed for trading on the NYSE.
5.12 PUBLIC ANNOUNCEMENTS. Seagate, Sub and Conner shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press release
or make any such public statement prior to such consultation except as may be
required by law.
5.13 AFFILIATES.
(a) Each Company shall use all reasonable efforts to obtain as
soon as practicable and in any event thirty (30) days prior to the expected
Effective Time, executed agreements with respect to the sale of capital stock
with each person who is an "affiliate" within the meaning of Rule 145 (for
purposes of this Section, each such person, an "Affiliate") of such Company
regarding compliance with pooling restrictions, which agreements shall be in
substantially the form of EXHIBIT C (with respect to Conner) and EXHIBIT D (with
respect to Seagate), respectively, attached to this Agreement.
(b) At least ten Business Days prior to the date of the
Stockholders Meetings, Conner shall deliver to Seagate a list of names and
addresses of those persons who were, in Conner's reasonable judgment after
consultation with legal counsel, at the record date for the Conner Stockholders
Meeting, Affiliates of Conner. Conner shall provide Seagate such information
and documents as Seagate shall reasonably request for purposes of reviewing such
list. Conner shall use its reasonable efforts to deliver or cause to be
delivered to Seagate, prior to the Effective Time, from each of the Affiliates
of Conner identified in the foregoing list (other than those that have delivered
agreements previously pursuant to Section 5.13(a) above), agreements
(collectively, the "Conner Affiliate Agreements") substantially in the form
attached to this Agreement as EXHIBIT C. Seagate and Sub shall be entitled to
place legends on the certificates evidencing any Seagate Common Stock to be
received by such Affiliates pursuant to the terms of this Agreement and the
Merger Agreement, and to issue
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appropriate stop transfer instructions to the transfer agent for Seagate Common
Stock, consistent with the terms of such Conner Affiliate Agreements, whether or
not such Conner Affiliate Agreements are actually delivered to Seagate.
5.14 CONNER OPTIONS.
(a) At the Effective Time, each outstanding option (each, a
"Conner Option") to purchase shares of Conner Common Stock issued pursuant to
the Conner stock option plans (including without limitation the Archive Plans,
and collectively, the "Conner Option Plans"), whether vested or unvested, shall
be assumed by Seagate. Accordingly, each Conner Option shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Conner Option, the number, rounded down to the nearest
whole integer, of full shares of Seagate Common Stock the holder of such Conner
Option would have been entitled to receive pursuant to the Merger had such
holder exercised such Conner Option in full, including as to unvested shares,
immediately prior to the Effective Time, at a price per share equal to (y) the
exercise price per share for the shares of Conner Common Stock otherwise
purchasable pursuant to such Conner Option divided by (z) the Exchange Ratio,
with such exercise price per share rounded up to the nearest whole cent.
(b) As soon as practicable after the Effective Time, Seagate shall
deliver to each holder of a Conner Option a document evidencing the foregoing
assumption of such Conner Option by Seagate.
(c) As soon as practicable after the Effective Time, Seagate shall
file a registration statement on Form S-8 (or any successor or other appropriate
form), or another appropriate form with respect to the shares of Seagate Common
Stock subject to such Conner Options and shall use its reasonable efforts to
maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such Conner Options remain outstanding. With respect to those individuals
who subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable, Seagate shall administer
the Conner Option Plans assumed pursuant to this Section 5.14 in a manner that
complies with Rule 16b-3 promulgated by the SEC under the Exchange Act to the
extent the applicable Conner Option Plan complied with such rule prior to the
Merger.
5.15 CONNER EMPLOYEE STOCK PURCHASE PLAN. Conner agrees that it shall
terminate the Conner Employee Stock Purchase Plan (the "Conner Purchase Plan")
by having its Board of Directors amend the Conner Purchase Plan as necessary (i)
to provide that the shares of Conner Common Stock to be purchased under the
Conner Purchase Plan shall be purchased under the Conner Purchase Plan on a new
"Exercise Date" (as such term is defined in the
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Conner Purchase Plan) set by the Board of Directors, which Exercise Date shall
be on the last trading day immediately prior to the Effective Time, or such
earlier time as the Board shall specify, (ii) to provide that any such shares
purchased under the Conner Purchase Plan shall be automatically converted on the
same basis as all other shares of Conner Common Stock (other than shares
canceled pursuant to Section 2.1(b)), except that such shares shall be converted
automatically into shares of Seagate Common Stock without issuance of
certificates representing issued and outstanding shares of Conner Common Stock
to Conner Purchase Plan participants, and (iii) to provide that immediately
following such purchase of shares of Conner Common Stock the Conner Purchase
Plan shall terminate. Seagate agrees that from and after the Effective Time
employees of Conner may participate in the Seagate Employee Stock Purchase Plan,
subject to the terms and conditions of such plan.
5.16 INDEMNIFICATION AND INSURANCE.
(a) Upon the Effective Time, Seagate shall assume all of the
obligations of Conner under Conner's existing indemnification agreements with
each of the directors and officers of Conner, as such agreements relate to the
indemnification of such persons for expenses and liabilities arising from facts
or events which occurred on or before the Effective Time or relating to the
Merger or transactions contemplated by this Agreement.
(b) The Bylaws of the Surviving Corporation shall contain
provisions identical with respect to indemnification to those set forth in
Article VI of the Bylaws of Conner as in effect on December 31, 1994, which
provisions and Article Tenth of the Certificate of Incorporation of Conner as in
effect as of December 31, 1994 shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at the Effective
Time were directors, officers, agents or employees of Conner.
(c) The Surviving Corporation or, at Seagate's discretion, Seagate
shall maintain in effect for three years from the Effective Time policies of
directors' and officers' liability insurance for the benefit of the individuals
who at the Effective Time were directors or officers of Conner containing terms
and conditions which are not less advantageous than those policies maintained by
Conner at the date hereof, with respect to matters occurring prior to the
Effective Time, to the extent available, and having the maximum available
coverage under the current policies of directors' and officers' liability
insurance provided that the Surviving Corporation or Seagate, as the case may
be, shall not be required to spend in excess of a $1.6 million annual premium
therefor; provided further that if the Surviving Corporation or Seagate, as the
case may be, would be required to spend in excess of a $1.6 million premium per
annum to obtain insurance having the maximum available coverage under the
current policies, the Surviving Corporation or Seagate, as the case may be, will
be required to spend $1.6 million to maintain or procure insurance coverage
pursuant hereto,
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subject to availability of such (or similar) coverage; provided that, in lieu of
the purchase of such insurance by Seagate or the Surviving Corporation, Conner
may purchase a three-year extended reporting period endorsement ("reporting tail
coverage") under its existing Directors' and Officers' liability insurance
coverage at a cost of up to $4.8 million.
(d) In furtherance of and not in limitation of the preceding
paragraph, Seagate agrees that subsequent to the Effective Time the officers and
directors of Conner that are defendants in all litigation commenced prior to the
Effective Time by stockholders of Conner with respect to (x) the performance of
their duties as such officers and/or directors under federal or state law
(including litigation under federal and state securities laws) and (y) Seagate's
offer or proposal to acquire Conner (the "Subject Litigation") shall be entitled
to be represented at the reasonable expense of Seagate (subject to the terms of
the indemnification provisions referred to in Section 5.16(a) and (b) above) in
the Subject Litigation by one counsel (and one local counsel in each
jurisdiction in which a case is or shall be pending) each of which such counsel
shall be selected by a plurality of such director defendants; provided that
neither Seagate nor the Surviving Corporation shall be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld) and that a condition to any indemnification payments
provided in this Section 5.16 shall be that such officer/director defendant not
have settled any Subject Litigation without the consent of Seagate or the
Surviving Corporation; and provided further that the Surviving Corporation and
Seagate shall have no obligation hereunder to any officer/director defendant to
the extent a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and non-appealable, that
indemnification of such officer/director defendant in the manner contemplated
hereby is prohibited by applicable law.
5.17 NOTIFICATION OF CERTAIN MATTERS. Conner shall give prompt notice to
Seagate, and Seagate and Sub shall give prompt notice to Conner, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be likely to cause (a) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Effective Time, or (b) any material
failure of Conner or Seagate and Sub, as the case may be, or of any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement. Notwithstanding the above, the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
POOLING ACCOUNTING. Each of Seagate and Conner agrees not to take
any action that would adversely affect the ability of Seagate to treat the
Merger as a pooling of interests, and each of Seagate and Conner agrees to take
such action as may be reasonably
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required to negate the impact of any past actions which would adversely impact
the ability of Seagate to treat the Merger as a pooling of interests.
5.19 CONNER DEBENTURES. Conner shall comply with all notice
requirements arising as a consequence of this Agreement and the transactions
contemplated hereby under those certain Indentures, dated as of March 1, 1991
and March 1, 1992 (the "Indentures"), between Conner and The First National Bank
of Boston as trustee thereunder (the "Trustee"), pursuant to which Conner's 6
3/4% Convertible Subordinated Debentures due 2001 and Conner's 6 1/2%
Convertible Subordinated Debentures due 2002, respectively (the "Conner
Debentures"), are issued and outstanding. At the Effective Time, Conner and, if
required, Seagate shall execute and deliver to the Trustee supplemental
indentures pursuant to, and satisfying the requirements of, Sections 12.01 and
15.06 of each Indenture, which supplemental indentures shall be in form and
substance reasonably satisfactory to Seagate and the Trustee.
5.20 BENEFIT PLANS GENERALLY. Seagate agrees to honor in accordance with
their terms all employment, severance and similar agreements to which Conner is
a party and which are listed on the Conner Disclosure Letter and all accrued
benefits that are vested as of the Effective Time under any Conner Employee
Plan. Seagate agrees to provide employees of Conner with credit for all service
with Conner or its affiliates for purposes of vesting and eligibility under any
employee benefit plan, program or arrangement of Seagate or its affiliates. To
the extent not otherwise specified in this Agreement, Seagate agrees that Conner
employees who continue to be employed by Conner after the Effective Time may
continue to participate in their current Conner sponsored employee benefit
programs through six months following the Effective Time. Subsequent to such
date, Conner employees shall participate in Seagate employee benefit programs or
comparable programs under substantially the same terms and conditions as all
other Seagate employees. To the extent not otherwise specified in this
Agreement, all Conner employee benefit programs will cease no earlier than six
months following the Effective Time, at a time to be determined by Seagate in
its discretion.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) HSR ACT. Any waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated, and no
action shall have
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been instituted by the Department of Justice or Federal Trade Commission
challenging or seeking to enjoin the consummation of the Merger, which action
shall not have been withdrawn or terminated.
(b) STOCKHOLDER APPROVAL. The issuance of Seagate Common Stock in
connection with the Merger shall have been approved by the requisite vote of the
stockholders of Seagate (as described in Section 4.24) and this Agreement and
the Merger Agreement shall have been approved and adopted by the requisite vote
of the stockholders of Conner (as described in Section 3.25), in each case in
accordance with applicable law and the rules and, with respect to Seagate, in
accordance with the regulations of the NYSE.
(c) EFFECTIVENESS OF THE S-4. The S-4 shall have been declared
effective by the SEC under the Securities Act and shall not be the subject of
any stop order or proceeding by the SEC seeking a stop order.
(d) GOVERNMENTAL ENTITY APPROVALS. All material authorizations,
consents, orders or approvals of, or declarations or filings with, or expiration
of waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement and the Merger
Agreement shall have been filed, expired or been obtained, other than those
that, individually or in the aggregate, the failure to be filed, expired or
obtained would not, in the reasonable opinion of Seagate, have a Material
Adverse Effect on Conner or Seagate.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; and there shall not be any action taken, or any
statute, rule, regulation or order (whether temporary, preliminary or permanent)
enacted, entered or enforced which makes the consummation of the Merger illegal
or prevents or prohibits the Merger.
(f) TAX OPINIONS. Seagate and Conner shall each have received
written opinions from their respective counsel Wilson, Sonsini, Goodrich &
Rosati, Professional Corporation and Wachtell, Lipton, Rosen & Katz in form and
substance reasonably satisfactory to them to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code
with respect to the Seagate Common Stock to be received by holders of Conner
Common Stock in the Merger. In rendering such opinions, counsel may rely upon
representations and certificates of Seagate, Sub and Conner.
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(g) POOLING-OF-INTERESTS ACCOUNTING TREATMENT. Conner, Seagate
and Sub shall have received a letter dated as of the Effective Time from the
independent accountants of Seagate and Conner in form and substance satisfactory
to Conner, Seagate and Sub regarding the appropriateness of the pooling of
interests accounting for the Merger under the Accounting Principles Board
Opinion No. 16 if closed and consummated in accordance with the terms of this
Agreement.
(h) NYSE LISTING. The shares of Seagate Common Stock issuable to
the holders of Conner Stock pursuant to the Merger shall have been authorized
for listing on the NYSE, upon official notice of issuance.
6.2 CONDITIONS OF OBLIGATIONS OF SEAGATE AND SUB. The obligations of
Seagate and Sub to effect the Merger are subject to the satisfaction of the
following additional conditions, unless waived in writing by Seagate:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Conner set forth in this Agreement shall be true and correct
(determined without regard to any materiality qualifiers, including without
limitation "Material Adverse Effect") (i) as of the date hereof and (ii) as of
the Closing Date, as though made on and as of the Closing Date (provided that in
the cases of clauses (i) and (ii) any such representation and warranty made as
of a specific date shall be true and correct as of such specific date), except
for such inaccuracies as individually or in the aggregate which would not have a
Material Adverse Effect on Conner and subsidiaries taken as a whole and Seagate
shall have received a certificate signed by the chief executive officer and the
chief financial officer of Conner to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF CONNER. Conner shall have
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement and the Merger Agreement prior to or as of
the Closing Date, and Seagate shall have received a certificate signed by the
chief executive officer and the chief financial officer of Conner to such
effect.
(c) CONSENTS. Seagate and Sub shall have received duly executed
copies of all material third-party consents and approvals contemplated by this
Agreement or the Conner Disclosure Letter in form and substance reasonably
satisfactory to Seagate and Sub, except those consents that the failure to so
receive would not, individually or in the aggregate, have a Material Adverse
Effect on Conner.
6.3 CONDITIONS OF OBLIGATION OF CONNER. The obligation of Conner to
effect the Merger is subject to the satisfaction of the following conditions,
unless waived in writing by Conner:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seagate and Sub set forth in this Agreement shall be true and
correct (determined without regard to any materiality qualifiers, including
without limitation "Material Adverse Effect") (i) as of the date hereof and
(ii) as of the Closing Date, as though made on and as of the Closing Date
(provided that in the cases of clauses (i) and (ii) any such representation and
warranty made as of a specific date shall be true and correct as of such
specific date), except for such inaccuracies as individually or in the aggregate
which would not have a Material Adverse Effect on Seagate and its subsidiaries
taken as a whole, and Conner shall have received a certificate signed by the
chief executive officer and the chief financial officer of Seagate and the
president of Sub to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF SEAGATE AND SUB. Each of
Seagate and Sub shall have performed in all material respects all obligations
and covenants required to be performed by it under this Agreement and the Merger
Agreement prior to or as of the Closing Date, and Conner shall have received a
certificate signed by the chief executive officer and the chief financial
officer of Seagate and the president of Sub to such effect.
(c) CONSENTS. Conner shall have received duly executed copies of
all material third-party consents and approvals contemplated by this Agreement
and the Seagate Disclosure Letter in form and substance satisfactory to Conner,
except those consents that the failure to so receive, would not, individually or
in the aggregate, have a Material Adverse Effect on Seagate.
ARTICLE 7
TERMINATION
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after approval of the Merger
by the stockholders of Seagate and Conner:
(a) by mutual written consent duly authorized by the Boards of
Directors of Seagate and Conner;
(b) by either Seagate or Conner if the Merger shall not have been
consummated by April 3, 1996 (PROVIDED that if the Merger shall not have been
consummated due to the waiting period (or any extension thereof) under the HSR
Act not having expired or been terminated, or due to an action having been
instituted by the Department of Justice or Federal Trade Commission challenging
or seeking to enjoin the consummation of the Merger, then such date shall be
extended to June 3, 1996, and PROVIDED
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FURTHER that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to any party whose action or failure to act has been the
cause of or resulted in the failure of the Merger to occur on or before such
date and such action or failure to act constitutes a breach of this Agreement);
(c) by either Seagate or Conner if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall (i) have issued an order, decree or ruling or taken any other action, in
any case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree or ruling is final and nonappealable
or (ii) seek to enjoin the Merger and the terminating party reasonably believes
that the time period required to resolve such governmental action and the
related uncertainty is reasonably likely to have a Material Adverse Effect on
either Seagate or Conner PROVIDED, that, solely for purposes of this Section
7.1(c), the definition of "Material Adverse Effect" shall not include the
exclusion contained under the proviso in the penultimate sentences of Section
3.1 and 4.1, respectively; or
(d) by either Seagate or Conner if the required approvals of the
stockholders of Seagate or Conner contemplated by this Agreement shall not have
been obtained by reason of the failure to obtain the required vote upon a vote
taken at a meeting of stockholders duly convened therefor or at any adjournment
thereof (PROVIDED that the right to terminate this Agreement under this
Section 7.1(d) shall not be available to any party where the failure to obtain
stockholder approval of such party shall have been caused by the action or
failure to act of such party in breach of this Agreement); or
(e) by either Seagate or Conner, if Conner (A) shall have accepted
or recommended to the stockholders of Conner a Superior Proposal, and (B) in the
case of the termination of this Agreement by Conner, Conner shall have paid to
Seagate all amounts owing by Conner to Seagate under Section 7.3(b); or
(f) by Seagate, if the Board of Directors of Conner shall have
withdrawn, modified or refrained from making its recommendation concerning the
Merger referred to in Section 5.4 or if a third party (including a person or a
group as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) acquires beneficial ownership of, or the right to
acquire beneficial ownership of, at least twenty percent (20%) of Conner's
outstanding voting equity securities; or
(g) by Conner, upon a breach of any representation, warranty,
covenant or agreement on the part of Seagate set forth in this Agreement, or if
any representation or warranty of Seagate shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, PROVIDED that if
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such inaccuracy in Seagate's representations and warranties or breach by Seagate
is curable by Seagate through the exercise of its reasonable efforts and for so
long as Seagate continues to exercise such reasonable efforts, Conner may not
terminate this Agreement under this Section 7.1(g); or
(h) by Seagate, upon a breach of any representation, warranty,
covenant or agreement on the part of Conner set forth in this Agreement, or if
any representation or warranty of Conner shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, PROVIDED, that if such
inaccuracy in Conner's representations and warranties or breach by Conner is
curable by Conner through the exercise of its reasonable efforts and for so long
as Conner continues to exercise such reasonable efforts, Seagate may not
terminate this Agreement under this Section 7.1(h); or
(i) by Seagate, at any time if, as a result of any structural
damage to the main manufacturing building at the Conner Penang facility (the
"Penang Facility"), there is, or there is reasonably expected to be, (i) a cost
to Conner (after insurance) in excess of $20 million; or (ii) a substantial
cessation of operations at the Penang Facility for at least fifteen (15) days
(excluding Sundays, holidays and any days not considered normal work days in
accordance with prior practice). The foregoing sentence in this Section 7.1(i)
shall in no way limit or expand the definition of "Material Adverse Effect" or
the rights of Seagate or Conner relating thereto set forth in other provisions
of this Agreement.
7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect, except (i) as set forth in this Section 7.2, Section 7.3 and
Article 8 (miscellaneous), each of which shall survive the termination of this
Agreement, and (ii) nothing herein shall relieve any party from liability for
any breach of this Agreement.
7.3 FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; PROVIDED, HOWEVER, that Seagate and Conner shall share
equally all fees and expenses, other than attorneys' fees, incurred in relation
to the printing and filing of the Proxy Statement (including any preliminary
materials related thereto) and the S-4 (including financial statements and
exhibits) and any amendments or supplements thereto.
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(b) Upon the occurrence of any of the following events, Conner
shall immediately make payment to Seagate (by wire transfer or cashiers check)
of a breakup fee in the amount of $35 million (the "Breakup Fee"): (i) Conner
shall have accepted a Superior Proposal; (ii) the Board of Directors of Conner
shall have withdrawn, modified or refrained from making its recommendation
concerning the Merger referred to in Section 5.4, or shall have disclosed its
intention to change such recommendation; or (iii) a third party (including a
person or a group as defined under Section 13(d) of the Exchange Act and the
rules and regulations thereunder) acquires beneficial ownership of, or the right
to acquire beneficial ownership of, at least twenty percent (20%) of Conner's
outstanding voting equity securities. Payment of the Breakup Fee shall be
subject to offset as described in the Conner Option Agreement, and shall be
reduced by any amount paid by Conner pursuant to the first sentence of
Section 7.3(c).
(c) Conner shall immediately make payment to Seagate (by wire
transfer or cashiers check) of a fee in the amount of $15 million in the event
that the Merger shall have been submitted to a vote of the Conner stockholders
as required hereunder, and the stockholders of Conner shall have failed for any
reason (other than as a result of Seagate's breach of this Agreement) to approve
the Merger by the requisite vote, provided, however, that if the Breakup Fee has
been paid in full by Conner pursuant to Section 7.3(b), then no amount shall be
payable by Conner hereunder. Seagate shall immediately make payment to Conner
(by wire transfer or cashiers check) of a fee in the amount of $15 million in
the event that the Merger shall have been submitted to a vote of the Seagate
stockholders as required hereunder, and the stockholders of Seagate shall have
failed for any reason (other than as a result of Conner's breach of this
Agreement) to approve the Merger by the requisite vote.
(d) Payment of the fees described in Section 7.3(b) and (c) above
shall not be in lieu of damages incurred in the event of breach of this
Agreement.
ARTICLE 8
GENERAL PROVISIONS
8.1 AMENDMENT. This Agreement may be amended prior to the Effective
Time by the parties, by action taken by their respective Boards of Directors, at
any time before or after approval of the Merger by the stockholders of Seagate
and Conner but, after any such approval, no amendment shall be made which by law
requires further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
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8.2 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties, by action taken by their respective Boards of Directors, may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties, (ii) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement and (iii) waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
8.3 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to be conditions
to the Merger and shall not survive the Merger, except for the agreements
contained in Sections 2.3 (further assurances) 5.14 (options), 5.15 (employee
stock purchase plan), 5.16 (indemnification), 5.19 (Conner Debentures), 7.3
(fees and expenses) and the Conner Option Agreement, each of which shall survive
the Merger.
8.4 ENTIRE AGREEMENT. This Agreement, the Conner Option Agreement, the
Merger Agreement (and the other exhibits hereto), the Confidentiality Agreement
and the other documents referenced herein contain the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior
arrangements and understandings, both written and oral, with respect thereto.
8.5 SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, in the event that any provision of this Agreement would be
held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
8.6 NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if contained
in a written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
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(a) if to Seagate or Sub, to:
Seagate Technology, Inc.
920 Disc Drive
P. O. Box 66360
Scotts Valley, CA 96067-0360
Attention: Donald L. Waite
Telecopier: (408) 438-2957;
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry W. Sonsini, Esq.
Telecopier: (415) 493-6811.
(b) if to Conner, to:
Conner Peripherals, Inc.
3081 Zanker Road
San Jose, CA 95134
Attention: P. Jackson Bell and Thomas F. Mulvaney, Esq.
Telecopier: (408) 456-3841;
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019-5150
Attention: Andrew R. Brownstein, Esq.
Telecopier: (212) 403-2000
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a telecopy, when the party receiving such telecopy shall have confirmed
receipt of the communication, (c) in the case of delivery by nationally-
recognized, overnight courier, on the Business Day following dispatch and (d) in
the case of mailing, on the third Business Day following such mailing.
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8.7 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.9 BENEFITS; ASSIGNMENT. This Agreement is not intended to confer upon
any person other than the parties any rights or remedies hereunder and shall not
be assigned by operation of law or otherwise; PROVIDED, HOWEVER, that (i) the
holders of Conner Options and the participants under the Conner Purchase Plan
are intended beneficiaries of the covenants and agreements contained in
Sections 5.14 and 5.15; (ii) the officers and directors of Conner are intended
beneficiaries of the covenants and agreements contained in Section 5.16 and
(iii) Sub may assign all or any portion of its rights hereunder to any other
newly-formed, wholly-owned subsidiary of Seagate, and Conner shall execute any
amendment to this Agreement necessary to provide the benefits of this Agreement
to any such assignee.
8.10 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed therein.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized, as of the date first
written above.
SEAGATE TECHNOLOGY, INC.
By: /s/ Donald L. Waite
------------------------------------------
Name: Donald L. Waite
----------------------------------------
Title: Executive Vice President, Chief Admin-
istrative Officer and Chief Financial
Officer
---------------------------------------
ATHENA ACQUISITION CORPORATION
By: /s/ Donald L. Waite
------------------------------------------
Name: Donald L. Waite
----------------------------------------
Title: Vice President
---------------------------------------
CONNER PERIPHERALS, INC.
By: /s/ Finia F. Conner
------------------------------------------
Name: Finia F. Conner
----------------------------------------
Title: Chairman and Chief Executive Officer
---------------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
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EXHIBIT A
STOCK OPTION AGREEMENT
THE OPTION EVIDENCED BY THIS OPTION AGREEMENT MAY NOT BE TRANSFERRED EXCEPT
TO A WHOLLY-OWNED SUBSIDIARY OF SEAGATE.
THIS STOCK OPTION AGREEMENT (the "Option Agreement") is dated as of
October 3, 1995, between Conner Peripherals, Inc., a Delaware corporation
("Conner"), and Seagate Technology, Inc., a Delaware corporation ("Seagate").
RECITALS
A. Seagate, Athena Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Seagate ("Sub"), and Conner are simultaneously
herewith entering into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") which provides, among other things, that, upon the
terms and subject to the conditions thereof, Sub will be merged with and into
Conner (the "Merger"), pursuant to which each issued and outstanding share of
common stock, par value $0.001 per share, of Conner (the "Conner Common Stock")
(including the associated Rights, as defined in Section 1 below) outstanding
immediately prior to the Merger will be converted into 0.442 shares (the
"Exchange Ratio") of common stock of Seagate, par value $.01 per share.
B. As a condition to their willingness to enter into the Reorganization
Agreement, Seagate and Sub have required that Conner agree, and Conner has
agreed, to enter into this Option Agreement, which provides, among other things,
that Conner grant Seagate an option to purchase shares of Conner Common Stock
upon the terms and subject to the conditions provided for herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained in this Option Agreement and the Reorganization Agreement,
the parties agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions of this Option
Agreement, Conner hereby grants to Seagate an irrevocable option (the "Option")
to purchase 8,015,420 shares of Conner Common Stock (the "Option Shares"),
including the associated rights (the "Rights") to purchase shares of Conner
Preferred Stock pursuant to the Preferred Shares Rights Agreement, dated as of
November 29, 1994, between Conner and The First National Bank of Boston, as the
same may be modified, terminated or amended from time to time (the "Rights
Agreement") in the manner set forth below, at an exercise price of $17.90 per
share of Conner Common Stock, subject to adjustment as provided below (the
"Option Price"). All references in this Option Agreement to shares of Conner
Common Stock issued to Seagate hereunder shall be deemed to include the
<PAGE>
Rights (subject to the terms of the Rights Agreement). Capitalized terms used
herein but not defined herein shall have the meanings set forth in the
Reorganization Agreement.
2. EXERCISE OF OPTION.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Section 9 of this Option Agreement, prior to the termination of this Option
Agreement in accordance with its terms, Seagate or its designee (which shall be
a wholly-owned subsidiary of Seagate) may exercise the Option, in whole or in
part, at any time or from time to time on or after the public disclosure of, or
Seagate shall have learned of, the earliest event to occur of the following:
(i) any person or group other than Seagate or its affiliates
shall have acquired or become the beneficial owners (within the meaning of
Section 13(d)(3) of the Exchange Act) of more than twenty percent (20%) of the
outstanding shares of Conner Common Stock, or shall have been granted any option
or right, conditional or otherwise, to acquire more than twenty percent (20%) of
the outstanding shares of Conner Common Stock (provided that in the event that
such option or right expires unexercised, then to the extent the Option has not
already been exercised, it shall no longer be exercisable except as otherwise
provided in this Option Agreement);
(ii) any person other than Seagate and its affiliates shall
have made a tender offer or exchange offer (or entered into an agreement to make
such a tender offer or exchange offer) for at least twenty percent (20%) of the
then outstanding shares of Conner Common Stock (provided that in the event that
such tender offer or exchange offer or other proposal is withdrawn or terminates
prior to consummation of such offer or proposal, then to the extent the Option
has not already been exercised, it shall no longer be exercisable except as
otherwise provided in this Section 2(a)); or
(iii) Conner shall have entered into a written definitive
agreement or written agreement in principle in connection with a liquidation,
dissolution, recapitalization, merger, consolidation or acquisition or purchase
of all or a material portion of the assets of Conner and its subsidiaries, taken
as a whole or all or a material portion of the equity interest in Conner and its
subsidiaries, taken as a whole, or other similar transaction or business
combination.
(b) In the event Seagate wishes to exercise the Option at such time
as the Option is exercisable, Seagate shall deliver written notice (the
"Exercise Notice") to Conner specifying its intention to exercise the Option,
the total number of Option Shares it wishes to purchase and a date and time for
the closing of such purchase (a "Closing") not later than thirty (30) business
days from the later of (i) the date such Exercise Notice is given and (ii) the
expiration or termination of any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). If prior
to the Expiration Date (as defined in Section 11 below) any person or group
(other than
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Seagate or its affiliates) shall have made a bona fide proposal that becomes
publicly disclosed, with respect to a tender offer or exchange offer for fifty
percent (50%) or more of the then outstanding shares of Conner Common Stock (a
"Share Proposal"), a merger, consolidation or other business combination (a
"Merger Proposal") or any acquisition of a material portion of the assets of
Conner (an "Asset Proposal"), or shall have acquired fifty percent (50%) or more
of the then outstanding shares of Conner Common Stock (a "Share Acquisition"),
and this Option is then exercisable then Seagate, in lieu of exercising the
Option, shall have the right at any time thereafter (for so long as the Option
is exercisable under Section 2(a)) to request in writing that Conner pay, and
promptly (but in any event not more than five (5) business days) after the
giving by Seagate of such request, Conner shall, subject to Section 2(c) below,
pay to Seagate, in cancellation of the Option, an amount in cash (the
"Cancellation Amount") equal to (i) the excess over the Option Price of the
greater of (A) the last sale price of a share of Conner Common Stock as reported
on the New York Stock Exchange on the last trading day prior to the date of the
Exercise Notice, or (B)(1) the highest price per share of Conner Common Stock
offered to be paid or paid by any such person or group pursuant to or in
connection with a Share Proposal, a Share Acquisition or a Merger Proposal or
(2) the aggregate consideration offered to be paid or paid in any transaction or
proposed transaction in connection with an Asset Proposal, divided by the number
of shares of Conner Common Stock then outstanding, multiplied by (ii) the number
of Option Shares then covered by the Option. If all or a portion of the price
per share of Conner Common Stock offered paid or payable or the aggregate
consideration offered paid or payable for the assets of Conner, each as
contemplated by the preceding sentence, consists of noncash consideration, such
price or aggregate consideration shall be the cash consideration, if any, plus
the fair market value of the non-cash consideration as determined by the
investment bankers of Conner and the investment bankers of Seagate.
(c) Following exercise of the Option by Seagate, in the event that
Seagate sells, pledges or otherwise disposes (including, without limitation, by
merger or exchange) any of the Option Shares (a "Sale") then (i) any Breakup Fee
due and payable by Conner following such time shall be offset by the amount
received (whether in cash, loan proceeds, securities or otherwise) by Seagate in
such Sale less the exercise price of such Option Shares sold in the Sale (the
"Offset Amount"), and (ii) if Conner has paid to Seagate the Breakup Fee prior
to the Sale, then Seagate shall immediately remit to Conner the Offset Amount.
Further, notwithstanding Section 2(b) above, in the event that Seagate receives
the Cancellation Amount in lieu of exercising the Option, then (A) any Breakup
Fee due and payable by Conner following such time shall be reduced by the
Cancellation Amount (the "Cancellation Offset Amount"), and (B) if Conner has
paid to Seagate the Breakup Fee prior to Seagate's receipt of such Cancellation
Amount, then Seagate shall only be entitled to receive that portion of the
Cancellation Offset Amount that exceeds the Breakup Fee. Notwithstanding the
above, in no event shall the Offset Amount or the Cancellation Offset Amount be
greater than the Breakup Fee.
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3. PAYMENT OF OPTION PRICE AND DELIVERY OF CERTIFICATE. Any Closings
under Section 2 of this Option Agreement shall be held at the offices of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo
Alto, California 94304, or at such other place as Conner and Seagate may agree.
At any Closing hereunder, (a) Seagate or its designee will make payment to
Conner of the aggregate price for the Option Shares being so purchased by
delivery of a certified check, official bank check or wire transfer of funds
pursuant to Conner's instructions payable to Conner in an amount equal to the
product obtained by multiplying the Option Price by the number of Option Shares
to be purchased, and (b) upon receipt of such payment Conner will deliver to
Seagate or its designee (which shall be a wholly-owned subsidiary of Seagate) a
certificate or certificates representing the number of validly issued, fully
paid and non-assessable Option Shares so purchased, in the denominations and
registered in such names (which shall be Seagate or a wholly-owned subsidiary of
Seagate) designated to Conner in writing by Seagate.
4. REGISTRATION AND LISTING OF OPTION SHARES.
(a) Conner agrees to use its reasonable best efforts to (i) effect as
promptly as possible upon the request of Seagate and (ii) cause to become and
remain effective for a period of not less than six (6) months (or such shorter
period as may be necessary to effect the distribution of such shares), the
registration under the Securities Act of 1933, as amended (the "Securities Act")
and any applicable state securities laws, of all or any part of the Option
Shares as may be specified in such request, PROVIDED, HOWEVER, that (i) Seagate
shall have the right to select the managing underwriter for any such offering
after consultation with Conner, which managing underwriter shall be reasonably
acceptable to Conner and (ii) Seagate shall not be entitled to more than two (2)
effective registration statements hereunder.
(b) In addition to such demand registrations, if Conner proposes to
effect a registration of Conner Common Stock for its own account or for the
account of any other stockholder of Conner, Conner will give prompt written
notice to all holders of Options or Option Shares of its intention to do so and
shall use its reasonable best efforts to include therein all Option Shares
requested by Seagate to be so included. No registration effected under this
Section 4(b) shall relieve Conner of its obligations to effect demand
registrations under Section 4(a) hereof.
(c) Registrations effected under this Section 4 shall be effected at
Conner's expense, including the fees and expenses of counsel to the holder of
Options or Option Shares but excluding underwriting discounts and commissions to
brokers or dealers. In connection with each registration under this Section 4,
Conner shall indemnify and hold each holder of Options or Option Shares
participating in such offering (a "Holder"), its underwriters and each of their
respective affiliates harmless against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, investigation expenses
and fees and disbursements of counsel and accountants), joint or several,
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to which such Holder, its underwriters and each of their respective affiliates
may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any registration statement (including any
prospectus therein), or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, other than such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) which arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in written
information furnished by a Holder to Conner expressly for use in such
registration statement.
(d) In connection with any registration statement pursuant to this
Section 4, each Holder agrees to furnish Conner with such information concerning
itself and the proposed sale or distribution as shall reasonably be required in
order to ensure compliance with the requirements of the Securities Act. In
addition, Seagate shall indemnify and hold Conner, its underwriters and each of
their respective affiliates harmless against any and all losses, claims,
damages, liabilities and expenses (including without limitation investigation
expenses and fees and disbursements of counsel and accountants), joint or
several, to which Conner, its underwriters and each of their respective
affiliates may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in written information furnished by any
Holder to Conner expressly for use in such registration statement.
(e) Upon the issuance of Option Shares hereunder, Conner will use its
reasonable best efforts promptly to list such Option Shares with the New York
Stock Exchange or on such national or other exchange on which the shares of
Conner Common Stock are at the time listed.
5. REPRESENTATIONS AND WARRANTIES OF CONNER. Conner hereby represents
and warrants to Seagate as follows:
(a) Conner is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has requisite power
and authority to enter into and perform this Option Agreement.
(b) The execution and delivery of this Option Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Conner and no other corporate
proceedings on the part of Conner are necessary to authorize this Option
Agreement or to consummate the transactions contemplated hereby. The Board of
Directors of Conner has duly approved the issuance and sale of the Option
Shares, upon the terms and subject to the conditions
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<PAGE>
contained in this Option Agreement, and the consummation of the transactions
contemplated hereby. This Option Agreement has been duly and validly executed
and delivered by Conner and, assuming this Option Agreement has been duly and
validly authorized, executed and delivered by Seagate, constitutes a valid and
binding obligation of Conner enforceable against Conner in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally; the
availability of injunctive relief and other equitable remedies; and limitations
imposed by law on indemnification for liability under federal securities laws.
(c) Conner has taken all necessary action to authorize and reserve
for issuance and to permit it to issue, and at all times from the date of this
Option Agreement through the date of expiration of the Option will have reserved
for issuance upon exercise of the Option, 8,015,420 authorized shares of Conner
Common Stock (or such other amount as may be required pursuant to Section 10
hereof), each of which, upon issuance pursuant to this Option Agreement and when
paid for as provided herein, will be validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all claims, liens,
charges, encumbrances and security interests and not subject to any preemptive
rights.
(d) The execution, delivery and performance of this Option Agreement
by Conner and the consummation by it of the transactions contemplated hereby
except as required by the HSR Act (if applicable), and, with respect to Section
4, compliance with the provisions of the Securities Act and any applicable state
securities laws, do not require the consent, waiver, approval, license or
authorization of or result in the acceleration of any obligation under, or
constitute a default under, any term, condition or provision of any charter or
bylaw, or any indenture, mortgage, lien, lease, agreement, contract, instrument,
order, judgment, ordinance, regulation or decree or any restriction to which
Conner or any property of Conner or its subsidiaries is bound, except where
failure to obtain such consents, waivers, approvals, licenses or authorizations
or where such acceleration or defaults could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
6. REPRESENTATIONS AND WARRANTIES OF SEAGATE. Seagate hereby represents
and warrants to Conner that:
(a) Seagate is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has requisite power
and authority to enter into and perform this Option Agreement.
(b) The execution and delivery of this Option Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Seagate and no other corporate
proceedings on the part of Seagate are necessary to authorize this Option
Agreement or to consummate the transactions contemplated hereby. This Option
Agreement has been duly and validly executed
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<PAGE>
and delivered by Seagate and, assuming this Option Agreement has been duly
executed and delivered by Conner, constitutes a valid and binding obligation of
Seagate enforceable against Seagate in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors' rights generally; the availability of
injunctive relief and other equitable remedies; and limitations imposed by law
on indemnification for liability under federal securities laws.
(c) Seagate or its designee is acquiring the Option and it will
acquire the Option Shares issuable upon the exercise thereof for its own account
and not with a view to the distribution or resale thereof in any manner not in
accordance with applicable law.
7. COVENANTS OF SEAGATE. Seagate agrees not to transfer or otherwise
dispose of the Option or the Option Shares, or any interest therein, except in
compliance with the Securities Act and any applicable state securities law.
Seagate further agrees to the placement of the following legend on the
certificate(s) representing the Option Shares (in addition to any legend
required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
EITHER (i) THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR (ii) ANY
APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF SECURITIES. NO
TRANSFER OR OTHER DISPOSITION OF THESE SHARES, OR OF ANY INTEREST THEREIN,
MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND SUCH OTHER STATE LAWS OR PURSUANT TO EXEMPTIONS FROM
REGISTRATION UNDER THE ACT, SUCH OTHER STATE LAWS, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER."
8. REASONABLE BEST EFFORTS. Seagate and Conner shall take, or cause to
be taken, all reasonable action to consummate and make effective the
transactions contemplated by this Option Agreement, including, without
limitation reasonable best efforts to obtain any necessary consents of third
parties and governmental agencies and the filing by Seagate and Conner promptly
after the date hereof of any required HSR Act notification forms and the
documents required to comply with the HSR Act, subject to the provisions of
Section 5.9 of the Reorganization Agreement.
9. CERTAIN CONDITIONS. The obligation of Conner to issue Option Shares
under this Option Agreement upon exercise of the Option shall be subject to the
satisfaction or waiver of the following conditions:
(a) any waiting periods applicable to the acquisition of the Option
Shares by Seagate pursuant to this Option Agreement under the HSR Act shall have
expired or been terminated;
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(b) the representations and warranties of Seagate made in Section 6
of this Option Agreement shall be true and correct in all material respects as
of the date of the Closing for the issuance of such Option Shares; and
(c) no order, decree or injunction entered by any court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
in the United States shall be in effect which prohibits the exercise of the
Option or acquisition of Option Shares pursuant to this Option Agreement.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change in the number of issued and outstanding shares of Conner Common Stock by
reason of any stock dividend, stock split, recapitalization, merger, rights
offering, share exchange or other change in the corporate or capital structure
of Conner, Seagate shall receive, upon exercise of the Option, the stock or
other securities, cash or property to which Seagate would have been entitled if
Seagate had exercised the Option and had been a holder of record of shares of
Conner Common Stock on the record date fixed for determination of holders of
shares of Conner Common Stock entitled to receive such stock or other
securities, cash or property at the same aggregate price as the aggregate Option
Price of the Option Shares. In the event that any additional shares of Common
Stock are issued after September 2, 1995 (other than pursuant to an event
described in the preceding sentence of this Option Agreement), the number of
shares of Common Stock subject to the Option shall be adjusted so that, after
such issuance, the number of shares of Common Stock subject to the Option
(ignoring any exercise of this Option) equals at least fifteen percent (15%) of
the number of shares of Conner Common Stock then issued and outstanding (other
than shares of Conner Common Stock issued pursuant to the Option); PROVIDED,
HOWEVER, that nothing contained in this Section 10 shall be deemed to authorize
Conner to issue any shares of Conner Common Stock in violation of the provisions
of the Reorganization Agreement.
11. EXPIRATION. The Option shall expire at the earlier of (y) the
Effective Time (as defined in the Reorganization Agreement) or (z) 200 days
after termination of the Reorganization Agreement in accordance with the terms
thereof (such expiration date is referred to as the "Expiration Date").
12. GENERAL PROVISIONS.
(a) SURVIVAL. All of the representations, warranties and covenants
contained herein shall survive a Closing and shall be deemed to have been made
as of the date hereof and as of the date of each Closing, except for the
representations and warranties in Section 5(d) hereof which shall be deemed to
have been made only as of the date hereof.
(b) FURTHER ASSURANCES. If Seagate exercises the Option, or any
portion thereof, in accordance with the terms of this Option Agreement, Conner
and Seagate will
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execute and deliver all such further documents and instruments and use their
reasonable best efforts to take all such further action as may be necessary in
order to consummate the transactions contemplated thereby.
(c) SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Option Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Option Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Option Agreement or affecting the validity or enforceability
of such provision in any other jurisdiction. Notwithstanding the foregoing, if
such provision could be more narrowly drawn so as not be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Option
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
(d) ASSIGNMENT. This Option Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns; PROVIDED that Conner shall not be entitled to assign or otherwise
transfer any of its rights or obligations hereunder.
(e) SPECIFIC PERFORMANCE. The parties agree and acknowledge that in
the event of a breach of any provision of this Option Agreement, the aggrieved
party would be without an adequate remedy at law. The parties therefore agree
that in the event of a breach of any provision of this Option Agreement, the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach of such provision, as well as to obtain damages for breach of
this Option Agreement. By seeking or obtaining any such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
(f) AMENDMENTS. This Option Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by Seagate and Conner.
(g) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to be
sufficient if contained in a written instrument and shall be deemed given if
delivered personally, telecopied, sent by nationally-recognized, overnight
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the other party at the following addresses (or such other
address for a party as shall be specified by like notice):
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If to Seagate:
Seagate Technology, Inc.
920 Disc Drive
P.O. Box 66360
Scotts Valley, CA 96067-0360
Attention: Donald L. Waite
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Larry W. Sonsini, Esq.
Telecopier: (415) 493-6811
If to Conner:
Conner Peripherals, Inc.
3081 Zanker Road
San Jose, CA 95134
Attention: P. Jackson Bell and Thomas F. Mulvaney, Esq.
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein, Esq.
Telecopier: (212) 403-2000
(h) HEADINGS. The headings contained in this Option Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Option Agreement.
(i) COUNTERPARTS. This Option Agreement may be executed in one or
more counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(j) GOVERNING LAW. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein.
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<PAGE>
(k) JURISDICTION AND VENUE. Each of Conner and Seagate hereby agrees
that any proceeding relating to this Option Agreement shall be brought in a
state court of Delaware. Each of Conner and Seagate hereby consents to personal
jurisdiction in any such action brought in any such Delaware court, consents to
service of process by registered mail made upon such party and such party's
agent and waives any objection to venue in any such Delaware court or to any
claim that any such Delaware court is an inconvenient forum.
(l) ENTIRE AGREEMENT. This Option Agreement, the Confidentiality
Agreements and the Reorganization Agreement and any documents and instruments
referred to herein and therein constitute the entire agreement between the
parties hereto and thereto with respect to the subject matter hereof and thereof
and supersede all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and thereof.
This Option Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the successors and permitted assigns of the parties hereto.
Nothing in this Option Agreement shall be construed to give any person other
than the parties to this Option Agreement or their respective successors or
permitted assigns any legal or equitable right, remedy or claim under or in
respect of this Option Agreement or any provision contained herein.
(m) EXPENSES. Except as otherwise provided in this Option Agreement,
each party shall pay its own expenses incurred in connection with this Option
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Option Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
SEAGATE TECHNOLOGY, INC.
By:
------------------------------------------
Name:
Title:
CONNER PERIPHERALS, INC.
By:
------------------------------------------
Name:
Title:
[SIGNATURE PAGE TO STOCK OPTION AGREEMENT]
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EXHIBIT B
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (the "Merger Agreement") is made and entered into
as of ________, 1995, by and between Athena Acquisition Corporation, a Delaware
corporation ("Sub") and Conner Peripherals, Inc., a Delaware corporation
("Conner" or the "Surviving Corporation"; Sub and Conner are sometimes referred
to as the "Constituent Corporations"). Capitalized terms used herein and not
defined in this Merger Agreement shall have their defined meanings as set forth
in the Agreement and Plan of Reorganization, dated as of October 3, 1995 (the
"Reorganization Agreement"), entered into by and among Seagate Technology, Inc.,
a Delaware corporation ("Seagate") and Conner.
NOW THEREFORE, in consideration of the premises and mutual covenants and
agreements contained herein, Sub and Conner agree as follows:
ARTICLE I
THE MERGER
1.1 MERGER OF SUB WITH AND INTO CONNER.
(a) AGREEMENT TO ACQUIRE CONNER. Subject to the terms of this
Merger Agreement and the Reorganization Agreement, Conner shall be acquired by
Seagate through a merger (the "Merger") of Sub with and into Conner.
(b) EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective upon the filing of this Merger Agreement, together with any required
officers' certificates of each Constituent Corporation with the Secretary of
State of the State of Delaware pursuant to Section 251 of the Delaware General
Corporation Law. The time of such filing is referred to as the "Effective
Time."
(c) SURVIVING CORPORATION. At the Effective Time, Sub shall be
merged with and into Conner and the separate corporate existence of Sub shall
thereupon cease. Conner shall be the surviving corporation in the Merger and
shall succeed, without other transfer, to all the rights and property of Sub and
shall be subject to all the debts and liabilities of Sub in the same manner as
if the Surviving Corporation had itself incurred them.
1.2 EFFECT OF THE MERGER; ADDITIONAL ACTIONS.
(a) EFFECTS. The Merger shall have the effects set forth in
Section 259 of the Delaware General Corporation Law.
(b) ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable (i) to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of
<PAGE>
either Constituent Corporation acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or (ii) to
otherwise carry out the purposes of this Merger Agreement, each Constituent
Corporation and its officers and directors shall be deemed to have granted to
the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, bills of sale, assignments and assurances and to take
and do all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation and otherwise to
carry out the purposes of this Merger Agreement; and the officers and directors
of the Surviving Corporation are fully authorized in the name of each
Constituent Corporation or otherwise to take any and all such actions.
ARTICLE II
THE CONSTITUENT CORPORATIONS
2.1 ORGANIZATION OF CONNER. Conner was incorporated under the laws of
the State of Delaware on June 24, 1992. Conner is authorized to issue an
aggregate of 100,000,000 shares of Common Stock, $0.001 par value per share
("Conner Common Stock"), and 20,000,000 shares of preferred stock, par value
$0.001 per share ("Conner Preferred Stock"). As of September 2, 1995,
53,436,131 shares of Conner Common Stock are outstanding.
2.2 ORGANIZATION OF SUB. Sub was incorporated under the laws of the
State of Delaware on September 25, 1995. Sub is authorized to issue an
aggregate of 1,000 shares of Common Stock, $0.01 par value per share ("Sub
Stock"), of which 100 shares are outstanding as of September 30, 1995.
ARTICLE III
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
3.1 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION.
(a) AMENDMENT OF CONNER'S CERTIFICATE OF INCORPORATION. At the
Effective Time, Article Fourth of the Certificate of Incorporation of Conner
shall be amended in its entirety to read as follows:
"The total number of shares of all classes of
stock which the corporation shall have authority to
issue is 1,000, all of which shall consist of Common
Stock, par value $0.001 per share."
(b) CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION. The
Certificate of Incorporation of Conner, as amended and in effect immediately
prior to the Effective Time, as amended as provided in Section 3.1(a) above,
shall be the Certificate of Incorporation of the Surviving Corporation unless
and until amended as provided by law and such Certificate of Incorporation.
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3.2 BYLAWS OF SURVIVING CORPORATION. The Bylaws of Sub as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation unless and until altered, amended or repealed as provided by
applicable law, the Certificate of Incorporation of the Surviving Corporation
and such Bylaws.
3.3 DIRECTORS OF SURVIVING CORPORATION. The directors of Sub shall be
the initial directors of the Surviving Corporation, and shall hold office from
the Effective Time until their respective successors shall have been duly
elected, appointed or until otherwise provided by law.
3.4 OFFICERS OF SURVIVING CORPORATION. The officers of Sub shall be the
initial officers of the Surviving Corporation.
ARTICLE IV
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
4.1 EFFECT ON CAPITAL STOCK. At the Effective Time, subject and
pursuant to the terms of this Agreement and the Reorganization Agreement, by
virtue of the Merger and without any action on the part of Constituent
Corporations or the holders of any shares of capital stock of the Constituent
Corporations:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
Common Stock, $0.01 par value, of Sub be converted into one (1) validly issued,
fully paid and non-assessable share of Common Stock, $0.001 par value, of the
Surviving Corporation. Each stock certificate of Sub evidencing ownership of
any such shares shall continue to evidence ownership of such shares of Common
Stock of the Surviving Corporation.
(b) CANCELLATION OF CERTAIN SHARES OF CONNER COMMON STOCK. Each
share of Conner Common Stock that is owned by Conner as treasury stock and each
share of Conner Common Stock that is owned by Seagate, Sub or any other
subsidiary of Seagate or Conner shall be canceled and no capital stock of
Seagate or other consideration shall be delivered in exchange therefor.
(c) CONVERSION OF CAPITAL STOCK OF CONNER. Subject to Section
4.1(d) below, each share of Conner Common Stock issued and outstanding at the
Effective Time (other than shares to be canceled pursuant to Section 4.1(b)
hereof and Section 2.1(b) of the Reorganization Agreement), including the
corresponding right (a "Conner Right") to purchase one one-hundredth of a share
of Preferred Stock, $0.001 par value, of Conner pursuant to the terms of the
Preferred Shares Rights Agreement dated as of November 29, 1994, between Conner
and The First National Bank of Boston as Rights Agent, as it may be amended from
time to time (the "Conner Rights Agreement"), that is issued and outstanding
immediately prior to the Effective Time shall automatically be canceled and
extinguished and converted, without any action on the part of the holders
thereof, into the right to receive 0.442 shares of Common Stock, $0.01 par
value, of Seagate ("Seagate Common Stock")(the "Exchange Ratio"). Prior to the
Distribution Date (as defined in the Conner Rights Agreement) and unless the
context otherwise requires, all references in this Merger Agreement to Conner
Common Stock shall be deemed to include Conner Rights.
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<PAGE>
(d) ADJUSTMENT OF EXCHANGE RATIO. If between the date of this
Merger Agreement and the Effective Time, the outstanding shares of Seagate
Common Stock or Conner Common Stock shall have been changed into a different
number of shares or a different class by reason of any reclassification,
recapitalization, split-up, stock dividend, stock combination, exchange of
shares, readjustment or otherwise, then the Exchange Ratio shall be
correspondingly adjusted.
(e) DISSENTERS' RIGHTS. Holders of shares of Conner Common Stock
who dissent from the Merger are not entitled to rights of appraisal under
Section 262 of the Delaware Law by virtue of Section 262(b) (1) and (2) of
Delaware General Corporation Law.
(f) FRACTIONAL SHARES. No certificates or scrip for fractional
shares of Seagate Common Stock shall be issued, but in lieu thereof each holder
of shares of Conner Common Stock who would otherwise be entitled to receive
certificates or scrip for a fraction of a share of Seagate Common Stock shall
receive from Seagate, at such time as such holder shall receive a certificate
representing shares of Seagate Common Stock, an amount of cash equal to the per
share market value of Seagate Common Stock determined by multiplying (i) the
closing price of a share of Seagate Common Stock as reported on the New York
Stock Exchange, Inc. (the "NYSE") composite tape on the last full trading day
prior to the Effective Time by (ii) the fraction of a share of Seagate Common
Stock to which such holder would otherwise be entitled. The fractional share
interests of each stockholder of Conner shall be aggregated, so that no Conner
stockholder shall receive cash in an amount equal to or greater than the value
of one full share of Seagate Common Stock.
(g) STOCK OPTIONS. At the Effective Time, all options to purchase
Conner Common Stock then outstanding shall be converted into options to
purchase Seagate Common Stock and assumed by Seagate in accordance with Section
5.14 of the Reorganization Agreement.
4.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Closing Date, Seagate shall
designate a bank or trust company, reasonably acceptable to Conner, to act as
exchange agent (the "Exchange Agent") in the Merger.
(b) SEAGATE TO PROVIDE COMMON STOCK. Promptly after the Effective
Time, Seagate shall deposit with the Exchange Agent, for the benefit of the
holders of shares of Conner Common Stock, for exchange in accordance with
Article IV hereof and the Reorganization Agreement, certificates representing
the shares of Seagate Common Stock (such shares of Seagate Common Stock,
together with any dividends or distributions with respect thereto, are referred
to as the "Exchange Fund") issuable pursuant to Section 4.1 hereof and the
Reorganization Agreement in exchange for outstanding shares of capital stock of
Conner, and cash in an amount sufficient for payment in lieu of fractional
shares pursuant to Section 4.1(f) above.
(c) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record (other
than Conner, any subsidiary of Conner, Sub, Seagate and any other subsidiary of
Seagate) (including holders of record pursuant to purchases made under the
Conner Purchase Plan immediately prior to the Effective Time pursuant to the
terms of the Reorganization Agreement) of a certificate or certificates which
immediately prior to the Effective Time
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<PAGE>
represented issued and outstanding shares of Conner Common Stock (collectively,
the "Certificates") whose shares are being converted into Seagate Common Stock
pursuant to Section 4.1 hereof and the Reorganization Agreement, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Seagate and Conner may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for Seagate
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with a duly executed letter of transmittal, and such other
documents as may be reasonably required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Seagate Common Stock to which such
holder has the right to receive pursuant to Section 4.1 hereof and the
Reorganization Agreement, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of shares of Conner Common
Stock which is not registered on the transfer records of Conner, a certificate
representing the proper number of shares of Seagate Common Stock may be issued
to a transferee if the Certificate representing such Conner Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by Section 4.2
hereof and the Reorganization Agreement, each Certificate shall be deemed, on
and after the Effective Time, to represent only the right to receive upon such
surrender the certificate representing shares of Seagate Common Stock and cash
in lieu of any fractional shares of Seagate Common Stock as contemplated by this
Article IV, the Reorganization Agreement and the provisions of the Delaware
General Corporation Law.
(d) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No
dividends or other distributions declared or made after the Effective Time with
respect to Seagate Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Seagate Common Stock represented thereby and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to Section 4.1(f)
hereof or the Reorganization Agreement until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect, if any, of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Seagate Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of a fractional
share of Seagate Common Stock to which such holder is entitled pursuant to
Section 4.1(f) hereof and the Reorganization Agreement and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Seagate Common Stock and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of Seagate Common Stock.
(e) NO FURTHER OWNERSHIP RIGHTS IN CAPITAL STOCK OF CONNER. All
Seagate Common Stock delivered upon the surrender for exchange of shares of
Conner Common Stock in accordance with the terms hereof and the Reorganization
Agreement including any cash paid pursuant to Sections 4.1(c) or 4.1(f) hereof
shall be deemed to have been delivered in full satisfaction of all rights
pertaining to such shares of Conner Common Stock. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Conner Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are
-5-
<PAGE>
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article IV and the Reorganization Agreement.
(f) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates evidencing shares of Conner Common Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall make payment in exchange for such
lost, stolen or destroyed certificates, upon the making of an affidavit of that
fact by the holder thereof, of such shares of Seagate Common Stock and cash for
fractional shares, if any, as may be required pursuant to Section 4.1(f) hereof
and the Reorganization Agreement; provided, however, that Seagate may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Seagate or the Exchange Agent with respect to the certificates alleged
to have been lost, stolen or destroyed.
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the stockholders of Conner for twelve (12)
months after the Effective Time shall be delivered to Seagate, upon demand, and
any former stockholders of Conner who have not previously complied with this
Article IV and the Reorganization Agreement shall thereafter look only to
Seagate for payment of their claim for Seagate Common Stock, any cash in lieu of
fractional shares of Seagate Common Stock and any dividends or distributions
with respect to Seagate Common Stock.
(h) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 4.2, neither the Exchange Agent, Seagate, Sub nor Conner shall be
liable to a holder of shares of Conner Common Stock or Seagate Common Stock, as
the case may be, for shares (or dividends or distributions with respect thereto)
from the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE V
TERMINATION
5.1 TERMINATION BY MUTUAL AGREEMENT. Notwithstanding the approval of
this Merger Agreement by the stockholders of Conner and Sub, this Merger
Agreement may be terminated at any time prior to the Effective Time by mutual
agreement of the Boards of Directors of Conner and Sub.
5.2 TERMINATION OF REORGANIZATION AGREEMENT. Notwithstanding the
approval of this Merger Agreement by the stockholders of Conner and Sub, this
Merger Agreement shall terminate forthwith in the event that the Reorganization
Agreement shall be terminated as therein provided.
5.3 EFFECTS OF TERMINATION. In the event of the termination of this
Merger Agreement, this Merger Agreement shall forthwith become void and there
shall be no liability on the part of Seagate, Sub or Conner or their respective
officers or directors, except to the extent otherwise provided in the
Reorganization Agreement.
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<PAGE>
ARTICLE VI
GENERAL PROVISIONS
6.1 AMENDMENT. This Merger Agreement may be amended prior to the
Effective Time by the parties hereto, by any action taken by their respective
Boards of Directors, at any time before or after approval of the Merger by the
stockholders of Conner and Sub but, after any such approval, no amendment shall
be made which by law requires the further approval of the stockholders of Conner
or Sub without obtaining such further approval. This Merger Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties.
6.2 COUNTERPARTS. This Merger Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
6.3 GOVERNING LAW. This Merger Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Merger Agreement
as of the date first written above.
ATHENA ACQUISITION CORPORATION
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
CONNER PERIPHERALS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
[SIGNATURE PAGE TO MERGER AGREEMENT]
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<PAGE>
EXHIBIT C
CONNER AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT (this "Agreement") is made and entered into as of
______________, 1995, between SEAGATE TECHNOLOGY, INC., a Delaware corporation
("Seagate"), CONNER PERIPHERALS, INC., a Delaware corporation ("Conner"), and
the undersigned ("Affiliate").
RECITALS
A. Conner, Seagate and Athena Acquisition Corporation, a wholly-owned
subsidiary of Seagate ("Sub"), have entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") and Conner and Sub have entered
or will enter into an Agreement of Merger, which agreements (collectively, the
"Merger Agreements") provide for the merger (the "Merger") of Sub with and into
Conner, with Conner as the surviving corporation (the "Surviving Corporation").
Pursuant to the Merger, all outstanding capital stock of Conner will be
converted into the common stock, $0.01 par value of Seagate (the "Seagate
Stock").
B. Affiliate may, as a result of the Merger, receive shares of Seagate
Stock in exchange for shares owned by Affiliate of the common stock, par value
$0.001, of Conner (the "Conner Stock").
C. Affiliate understands that, since the Merger will be accounted for
using the "pooling of interests" method and Affiliate may be deemed, as of the
date hereof, to be an "affiliate" of Conner, as such term is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations of
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), although nothing contained
herein should be construed as an admission of such fact, the Seagate Stock and
the Conner Stock beneficially owned by Affiliate may only be disposed of in
conformity with the limitations described herein.
NOW THEREFORE, the parties agree as follows:
1. AGREEMENT TO RETAIN SHARES. Affiliate agrees not to transfer, sell,
or otherwise dispose of or direct or cause the sale, transfer or other
disposition of, or reduce Affiliate's risk relative to, any shares of Conner
Stock (except for the conversion of Conner Stock into Seagate Stock in the
Merger) or Seagate Stock held by Affiliate or on Affiliate's behalf, whether
owned on the date hereof or after acquired, within the 30 days prior to the
Effective Time (as defined in the Reorganization Agreement).
Affiliate further agrees not to transfer, sell or otherwise dispose
of, or direct or cause the sale, transfer or other disposition of, or reduce
Affiliate's risk relative to, any Seagate Stock held by Affiliate or on
Affiliate's behalf or received by Affiliate or on Affiliate's behalf in or as a
result of the Merger or otherwise, until after the date (the "Expiration Date")
Seagate shall have publicly
<PAGE>
released a report in the form of a quarterly earnings report, registration
statement filed with the Commission, a report filed with the Commission on Form
10-K, 10-Q or 8-K or any other public filing, statement or public announcement
which includes the combined financial results (including combined sales and net
income) of Seagate and Conner for a period of at least 30 days of combined
operations of Seagate and Conner following the Effective Time.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF AFFILIATE. Affiliate
represents, warrants and covenants as follows:
(a) Affiliate has full power and authority to execute this Agreement,
to make the representations, warranties and covenants herein contained and to
perform Affiliate's obligations hereunder.
(b) Affiliate will not sell, transfer, or otherwise dispose of, or
make any offer or agreement relating to any of the foregoing with respect to,
any shares of Seagate Stock that Affiliate may acquire in connection with the
Merger, except: (i) in a transaction permitted pursuant to Rule 145 under the
Securities Act; (ii) in a transaction that is otherwise exempt from the
registration requirements of the Securities Act; or (iii) pursuant to a
registration statement under the Securities Act.
3. RULES 144 AND 145. From and after the Effective Time of the Merger
and for so long as is necessary in order to permit Affiliate to sell the Seagate
Stock held by Affiliate pursuant to Rule 145 and, to the extent applicable, Rule
144 under the Securities Act, Seagate will use its reasonable best efforts to
file on a timely basis all reports required to be filed by it pursuant to the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, as the same shall be in effect at the time, referred to in paragraph
(c) of Rule 144 under the Securities Act, in order to permit Affiliate to sell,
transfer or otherwise dispose of the Seagate Stock held by it pursuant to the
terms and conditions of Rule 145 and the applicable provisions of Rule 144.
4. LIMITED RESALES. Seagate acknowledges that the provisions of
Section 2(b) of this Agreement will be satisfied as to any sale by the
undersigned of the Seagate Stock Affiliate may acquire pursuant to the Merger
pursuant to Rule 145(d) under the Securities Act, by a broker's letter and a
letter from the undersigned with respect to that sale stating that the
applicable requirements of Rule 145(d)(1) have been met or are inapplicable by
virtue of Rule 145(d)(2) or Rule 145(d)(3); provided, however, that Seagate has
no reasonable basis to believe that such sales were not made in compliance with
such provisions of Rule 145(d) and subject to any changes in Rule 145 after the
date of this Agreement.
5. LEGENDS. Affiliate also understands and agrees that stop transfer
instructions will be given to Seagate's transfer agent with respect to
certificates evidencing the Seagate Stock Affiliate may acquire pursuant to the
Merger and that there will be placed on the certificate evidencing the Seagate
Stock Affiliate may acquire pursuant to the Merger legends stating in substance:
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<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED,
SOLD, PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AND THE
OTHER CONDITIONS SPECIFIED IN THAT CERTAIN AFFILIATE AGREEMENT DATED
___________, 1995 AMONG SEAGATE TECHNOLOGY, INC., CONNER PERIPHERALS, INC.
AND THE STOCKHOLDER, A COPY OF WHICH AFFILIATE AGREEMENT WILL BE MAILED TO
THE HOLDER HEREOF WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF WRITTEN
REQUEST THEREFOR."
After the Expiration Date, Seagate agrees to remove the above legend, and
replace such legend with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD,
PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED."
Seagate agrees to remove promptly such stop transfer instructions and legend by
delivery of substitute certificates without such legend upon (i) the transfer of
the Seagate Stock represented by such certificate pursuant to a registration
statement under the Securities Act or in accordance with the applicable
provisions of Rule 145 under the Securities Act (including, without limitation,
paragraph (d) thereof), (ii) the expiration of the restrictive period set forth
in Rule 145(d), or (iii) the delivery by Affiliate to Seagate of a copy of a
letter from the staff of the Commission, or an opinion of counsel in form and
substance reasonably satisfactory to Seagate, to the effect that such legend is
not required for purposes of the Securities Act.
6. TERMINATION. This Agreement shall be terminated and shall be of no
further force and effect upon the termination of the Reorganization Agreement
pursuant to Article 7 of the Reorganization Agreement.
7. MISCELLANEOUS.
(a) COUNTERPARTS. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(b) BINDING AGREEMENT. This Agreement will inure to the benefit of
and be binding upon and enforceable against the parties and their successors and
assigns, including administrators, executors, representatives, heirs, legatees
and devisees of Affiliate and pledgees holding Seagate Stock or Conner Stock as
collateral.
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<PAGE>
(c) WAIVER. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement shall be effective unless in writing
and signed by each party hereto.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
Delaware.
(e) EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
(f) THIRD PARTY RELIANCE. Counsel to and independent auditors for
the parties shall be entitled to rely upon this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
SEAGATE TECHNOLOGY, INC. AFFILIATE
By: By:
-------------------------------- -------------------------------------
Title:
----------------------------- Affiliate's Address for Notice:
----------------------------------------
CONNER PERIPHERALS, INC.
----------------------------------------
By:
-------------------------------- ----------------------------------------
Title:
-----------------------------
[SIGNATURE PAGE TO AFFILIATE AGREEMENT]
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<PAGE>
EXHIBIT D
SEAGATE AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT (this "Agreement") is made and entered into as of
____________, 1995, between SEAGATE, TECHNOLOGY, INC., a Delaware corporation
("Seagate"), CONNER PERIPHERALS, INC., a Delaware corporation ("Conner"), and
the undersigned affiliate ("Affiliate") of Seagate.
RECITALS
A. Conner, Seagate and Athena Acquisition Corporation, a wholly-owned
subsidiary of Seagate ("Sub"), have entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") and Conner and Sub have entered
or will enter into an Agreement of Merger, which agreements (collectively, the
"Merger Agreements") provide for the merger (the "Merger") of Sub with and into
Conner. Pursuant to the Merger, all outstanding capital stock of Conner will be
converted into the common stock, $0.01 par value, of Seagate (the "Seagate
Stock").
B. Affiliate is the beneficial owner (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of such
number of shares of Seagate Stock as is indicated on the final page of this
Agreement.
C. Affiliate understands that, since the Merger will be accounted for
using the "pooling of interests" method and Affiliate may be deemed, as of the
date hereof, to be an "affiliate" of Seagate, as such term is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations of
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), although nothing contained
herein should be construed as an admission of such fact, the Seagate Stock and
the Conner Stock (as defined in Section 1 below) beneficially owned by Affiliate
may only be disposed of in conformity with the limitations described herein.
NOW THEREFORE, the parties agree as follows:
1. AGREEMENT TO RETAIN SHARES. Affiliate agrees not to transfer, sell,
or otherwise dispose of, or direct or cause the sale, transfer or other
disposition of, or reduce Affiliate's risk relative to, any shares of common
stock, par value $.001 of Conner (the "Conner Stock") (except for the conversion
of Conner Stock into Seagate Stock in the Merger) or Seagate Stock held by
Affiliate or on Affiliate's behalf, whether owned on the date hereof or after
acquired, within the 30 days prior to the Effective Time (as defined in the
Reorganization Agreement).
Affiliate further agrees not to transfer, sell or otherwise dispose
of, or direct or cause the sale, transfer or other disposition of, or reduce
Affiliate's risk relative to, any Seagate Stock held by Affiliate or on
Affiliate's behalf or received by Affiliate or on Affiliate's behalf in or as a
result of
<PAGE>
the Merger or otherwise, until after the date Seagate shall have publicly
released a report in the form of a quarterly earnings report, registration
statement filed with the Securities and Exchange Commission (the "Commission"),
a report filed with the Commission on Form 10-K, 10-Q or 8-K or any other public
filing, statement or public announcement which includes the combined financial
results (including combined sales and net income) of Seagate and Conner for a
period of at least 30 days of combined operations of Seagate and Conner
following the Effective Time.
2. TERMINATION. This Agreement shall be terminated and shall be of no
further force and effect upon the termination of the Reorganization Agreement
pursuant to Article 7 of the Reorganization Agreement.
3. MISCELLANEOUS.
(a) COUNTERPARTS. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(b) BINDING AGREEMENT. This Agreement will inure to the benefit
of and be binding upon and enforceable against the parties and their successors
and assigns, including administrators, executors, representatives, heirs,
legatees and devisees of Affiliate and pledgees holding Seagate Stock or Conner
Stock as collateral.
(c) WAIVER. No waiver by any party hereto of any condition or of
any breach of any provision of this Agreement shall be effective unless in
writing and signed by each party hereto.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
Delaware.
(e) EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
(f) THIRD PARTY RELIANCE. Counsel to and independent auditors for
the parties shall be entitled to rely upon this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
SEAGATE TECHNOLOGY, INC. AFFILIATE
By: By:
-------------------------------- -------------------------------------
Title:
----------------------------- Affiliate's Address for Notice:
----------------------------------------
CONNER PERIPHERALS, INC.
----------------------------------------
By:
-------------------------------- ----------------------------------------
Title:
-----------------------------
Shares beneficially owned:
_____________ shares of
Seagate Common Stock
[SIGNATURE PAGE TO AFFILIATE AGREEMENT]
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<PAGE>
EXHIBIT 2
STOCK OPTION AGREEMENT
THE OPTION EVIDENCED BY THIS OPTION AGREEMENT MAY NOT BE TRANSFERRED EXCEPT
TO A WHOLLY-OWNED SUBSIDIARY OF SEAGATE.
THIS STOCK OPTION AGREEMENT (the "Option Agreement") is dated as of
October 3, 1995, between Conner Peripherals, Inc., a Delaware corporation
("Conner"), and Seagate Technology, Inc., a Delaware corporation ("Seagate").
RECITALS
A. Seagate, Athena Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Seagate ("Sub"), and Conner are simultaneously
herewith entering into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") which provides, among other things, that, upon the
terms and subject to the conditions thereof, Sub will be merged with and into
Conner (the "Merger"), pursuant to which each issued and outstanding share of
common stock, par value $0.001 per share, of Conner (the "Conner Common Stock")
(including the associated Rights, as defined in Section 1 below) outstanding
immediately prior to the Merger will be converted into 0.442 shares (the
"Exchange Ratio") of common stock of Seagate, par value $.01 per share.
B. As a condition to their willingness to enter into the Reorganization
Agreement, Seagate and Sub have required that Conner agree, and Conner has
agreed, to enter into this Option Agreement, which provides, among other things,
that Conner grant Seagate an option to purchase shares of Conner Common Stock
upon the terms and subject to the conditions provided for herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained in this Option Agreement and the Reorganization Agreement,
the parties agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions of this Option
Agreement, Conner hereby grants to Seagate an irrevocable option (the "Option")
to purchase 8,015,420 shares of Conner Common Stock (the "Option Shares"),
including the associated rights (the "Rights") to purchase shares of Conner
Preferred Stock pursuant to the Preferred Shares Rights Agreement, dated as of
November 29, 1994, between Conner and The First National Bank of Boston, as the
same may be modified, terminated or amended from time to time (the "Rights
Agreement") in the manner set forth below, at an exercise price of $17.90 per
share of Conner Common Stock, subject to adjustment as provided below (the
"Option Price"). All references in this Option Agreement to shares of Conner
Common Stock issued to Seagate hereunder shall be deemed to include the
<PAGE>
Rights (subject to the terms of the Rights Agreement). Capitalized terms used
herein but not defined herein shall have the meanings set forth in the
Reorganization Agreement.
2. EXERCISE OF OPTION.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Section 9 of this Option Agreement, prior to the termination of this Option
Agreement in accordance with its terms, Seagate or its designee (which shall be
a wholly-owned subsidiary of Seagate) may exercise the Option, in whole or in
part, at any time or from time to time on or after the public disclosure of, or
Seagate shall have learned of, the earliest event to occur of the following:
(i) any person or group other than Seagate or its affiliates
shall have acquired or become the beneficial owners (within the meaning of
Section 13(d)(3) of the Exchange Act) of more than twenty percent (20%) of the
outstanding shares of Conner Common Stock, or shall have been granted any option
or right, conditional or otherwise, to acquire more than twenty percent (20%) of
the outstanding shares of Conner Common Stock (provided that in the event that
such option or right expires unexercised, then to the extent the Option has not
already been exercised, it shall no longer be exercisable except as otherwise
provided in this Option Agreement);
(ii) any person other than Seagate and its affiliates shall
have made a tender offer or exchange offer (or entered into an agreement to make
such a tender offer or exchange offer) for at least twenty percent (20%) of the
then outstanding shares of Conner Common Stock (provided that in the event that
such tender offer or exchange offer or other proposal is withdrawn or terminates
prior to consummation of such offer or proposal, then to the extent the Option
has not already been exercised, it shall no longer be exercisable except as
otherwise provided in this Section 2(a)); or
(iii) Conner shall have entered into a written definitive
agreement or written agreement in principle in connection with a liquidation,
dissolution, recapitalization, merger, consolidation or acquisition or purchase
of all or a material portion of the assets of Conner and its subsidiaries, taken
as a whole or all or a material portion of the equity interest in Conner and its
subsidiaries, taken as a whole, or other similar transaction or business
combination.
(b) In the event Seagate wishes to exercise the Option at such time
as the Option is exercisable, Seagate shall deliver written notice (the
"Exercise Notice") to Conner specifying its intention to exercise the Option,
the total number of Option Shares it wishes to purchase and a date and time for
the closing of such purchase (a "Closing") not later than thirty (30) business
days from the later of (i) the date such Exercise Notice is given and (ii) the
expiration or termination of any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). If prior
to the Expiration Date (as defined in Section 11 below) any person or group
(other than
2
<PAGE>
Seagate or its affiliates) shall have made a bona fide proposal that becomes
publicly disclosed, with respect to a tender offer or exchange offer for fifty
percent (50%) or more of the then outstanding shares of Conner Common Stock (a
"Share Proposal"), a merger, consolidation or other business combination (a
"Merger Proposal") or any acquisition of a material portion of the assets of
Conner (an "Asset Proposal"), or shall have acquired fifty percent (50%) or more
of the then outstanding shares of Conner Common Stock (a "Share Acquisition"),
and this Option is then exercisable then Seagate, in lieu of exercising the
Option, shall have the right at any time thereafter (for so long as the Option
is exercisable under Section 2(a)) to request in writing that Conner pay, and
promptly (but in any event not more than five (5) business days) after the
giving by Seagate of such request, Conner shall, subject to Section 2(c) below,
pay to Seagate, in cancellation of the Option, an amount in cash (the
"Cancellation Amount") equal to (i) the excess over the Option Price of the
greater of (A) the last sale price of a share of Conner Common Stock as reported
on the New York Stock Exchange on the last trading day prior to the date of the
Exercise Notice, or (B)(1) the highest price per share of Conner Common Stock
offered to be paid or paid by any such person or group pursuant to or in
connection with a Share Proposal, a Share Acquisition or a Merger Proposal or
(2) the aggregate consideration offered to be paid or paid in any transaction or
proposed transaction in connection with an Asset Proposal, divided by the number
of shares of Conner Common Stock then outstanding, multiplied by (ii) the number
of Option Shares then covered by the Option. If all or a portion of the price
per share of Conner Common Stock offered paid or payable or the aggregate
consideration offered paid or payable for the assets of Conner, each as
contemplated by the preceding sentence, consists of noncash consideration, such
price or aggregate consideration shall be the cash consideration, if any, plus
the fair market value of the non-cash consideration as determined by the
investment bankers of Conner and the investment bankers of Seagate.
(c) Following exercise of the Option by Seagate, in the event that
Seagate sells, pledges or otherwise disposes (including, without limitation, by
merger or exchange) any of the Option Shares (a "Sale") then (i) any Breakup Fee
due and payable by Conner following such time shall be offset by the amount
received (whether in cash, loan proceeds, securities or otherwise) by Seagate in
such Sale less the exercise price of such Option Shares sold in the Sale (the
"Offset Amount"), and (ii) if Conner has paid to Seagate the Breakup Fee prior
to the Sale, then Seagate shall immediately remit to Conner the Offset Amount.
Further, notwithstanding Section 2(b) above, in the event that Seagate receives
the Cancellation Amount in lieu of exercising the Option, then (A) any Breakup
Fee due and payable by Conner following such time shall be reduced by the
Cancellation Amount (the "Cancellation Offset Amount"), and (B) if Conner has
paid to Seagate the Breakup Fee prior to Seagate's receipt of such Cancellation
Amount, then Seagate shall only be entitled to receive that portion of the
Cancellation Offset Amount that exceeds the Breakup Fee. Notwithstanding the
above, in no event shall the Offset Amount or the Cancellation Offset Amount be
greater than the Breakup Fee.
3
<PAGE>
3. PAYMENT OF OPTION PRICE AND DELIVERY OF CERTIFICATE. Any Closings
under Section 2 of this Option Agreement shall be held at the offices of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo
Alto, California 94304, or at such other place as Conner and Seagate may agree.
At any Closing hereunder, (a) Seagate or its designee will make payment to
Conner of the aggregate price for the Option Shares being so purchased by
delivery of a certified check, official bank check or wire transfer of funds
pursuant to Conner's instructions payable to Conner in an amount equal to the
product obtained by multiplying the Option Price by the number of Option Shares
to be purchased, and (b) upon receipt of such payment Conner will deliver to
Seagate or its designee (which shall be a wholly-owned subsidiary of Seagate) a
certificate or certificates representing the number of validly issued, fully
paid and non-assessable Option Shares so purchased, in the denominations and
registered in such names (which shall be Seagate or a wholly-owned subsidiary of
Seagate) designated to Conner in writing by Seagate.
4. REGISTRATION AND LISTING OF OPTION SHARES.
(a) Conner agrees to use its reasonable best efforts to (i) effect as
promptly as possible upon the request of Seagate and (ii) cause to become and
remain effective for a period of not less than six (6) months (or such shorter
period as may be necessary to effect the distribution of such shares), the
registration under the Securities Act of 1933, as amended (the "Securities Act")
and any applicable state securities laws, of all or any part of the Option
Shares as may be specified in such request, PROVIDED, HOWEVER, that (i) Seagate
shall have the right to select the managing underwriter for any such offering
after consultation with Conner, which managing underwriter shall be reasonably
acceptable to Conner and (ii) Seagate shall not be entitled to more than two (2)
effective registration statements hereunder.
(b) In addition to such demand registrations, if Conner proposes to
effect a registration of Conner Common Stock for its own account or for the
account of any other stockholder of Conner, Conner will give prompt written
notice to all holders of Options or Option Shares of its intention to do so and
shall use its reasonable best efforts to include therein all Option Shares
requested by Seagate to be so included. No registration effected under this
Section 4(b) shall relieve Conner of its obligations to effect demand
registrations under Section 4(a) hereof.
(c) Registrations effected under this Section 4 shall be effected at
Conner's expense, including the fees and expenses of counsel to the holder of
Options or Option Shares but excluding underwriting discounts and commissions to
brokers or dealers. In connection with each registration under this Section 4,
Conner shall indemnify and hold each holder of Options or Option Shares
participating in such offering (a "Holder"), its underwriters and each of their
respective affiliates harmless against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, investigation expenses
and fees and disbursements of counsel and accountants), joint or several,
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to which such Holder, its underwriters and each of their respective affiliates
may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any registration statement (including any
prospectus therein), or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, other than such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) which arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in written
information furnished by a Holder to Conner expressly for use in such
registration statement.
(d) In connection with any registration statement pursuant to this
Section 4, each Holder agrees to furnish Conner with such information concerning
itself and the proposed sale or distribution as shall reasonably be required in
order to ensure compliance with the requirements of the Securities Act. In
addition, Seagate shall indemnify and hold Conner, its underwriters and each of
their respective affiliates harmless against any and all losses, claims,
damages, liabilities and expenses (including without limitation investigation
expenses and fees and disbursements of counsel and accountants), joint or
several, to which Conner, its underwriters and each of their respective
affiliates may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in written information furnished by any
Holder to Conner expressly for use in such registration statement.
(e) Upon the issuance of Option Shares hereunder, Conner will use its
reasonable best efforts promptly to list such Option Shares with the New York
Stock Exchange or on such national or other exchange on which the shares of
Conner Common Stock are at the time listed.
5. REPRESENTATIONS AND WARRANTIES OF CONNER. Conner hereby represents
and warrants to Seagate as follows:
(a) Conner is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has requisite power
and authority to enter into and perform this Option Agreement.
(b) The execution and delivery of this Option Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Conner and no other corporate
proceedings on the part of Conner are necessary to authorize this Option
Agreement or to consummate the transactions contemplated hereby. The Board of
Directors of Conner has duly approved the issuance and sale of the Option
Shares, upon the terms and subject to the conditions
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contained in this Option Agreement, and the consummation of the transactions
contemplated hereby. This Option Agreement has been duly and validly executed
and delivered by Conner and, assuming this Option Agreement has been duly and
validly authorized, executed and delivered by Seagate, constitutes a valid and
binding obligation of Conner enforceable against Conner in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally; the
availability of injunctive relief and other equitable remedies; and limitations
imposed by law on indemnification for liability under federal securities laws.
(c) Conner has taken all necessary action to authorize and reserve
for issuance and to permit it to issue, and at all times from the date of this
Option Agreement through the date of expiration of the Option will have reserved
for issuance upon exercise of the Option, 8,015,420 authorized shares of Conner
Common Stock (or such other amount as may be required pursuant to Section 10
hereof), each of which, upon issuance pursuant to this Option Agreement and when
paid for as provided herein, will be validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all claims, liens,
charges, encumbrances and security interests and not subject to any preemptive
rights.
(d) The execution, delivery and performance of this Option Agreement
by Conner and the consummation by it of the transactions contemplated hereby
except as required by the HSR Act (if applicable), and, with respect to Section
4, compliance with the provisions of the Securities Act and any applicable state
securities laws, do not require the consent, waiver, approval, license or
authorization of or result in the acceleration of any obligation under, or
constitute a default under, any term, condition or provision of any charter or
bylaw, or any indenture, mortgage, lien, lease, agreement, contract, instrument,
order, judgment, ordinance, regulation or decree or any restriction to which
Conner or any property of Conner or its subsidiaries is bound, except where
failure to obtain such consents, waivers, approvals, licenses or authorizations
or where such acceleration or defaults could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
6. REPRESENTATIONS AND WARRANTIES OF SEAGATE. Seagate hereby represents
and warrants to Conner that:
(a) Seagate is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has requisite power
and authority to enter into and perform this Option Agreement.
(b) The execution and delivery of this Option Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Seagate and no other corporate
proceedings on the part of Seagate are necessary to authorize this Option
Agreement or to consummate the transactions contemplated hereby. This Option
Agreement has been duly and validly executed
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and delivered by Seagate and, assuming this Option Agreement has been duly
executed and delivered by Conner, constitutes a valid and binding obligation of
Seagate enforceable against Seagate in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors' rights generally; the availability of
injunctive relief and other equitable remedies; and limitations imposed by law
on indemnification for liability under federal securities laws.
(c) Seagate or its designee is acquiring the Option and it will
acquire the Option Shares issuable upon the exercise thereof for its own account
and not with a view to the distribution or resale thereof in any manner not in
accordance with applicable law.
7. COVENANTS OF SEAGATE. Seagate agrees not to transfer or otherwise
dispose of the Option or the Option Shares, or any interest therein, except in
compliance with the Securities Act and any applicable state securities law.
Seagate further agrees to the placement of the following legend on the
certificate(s) representing the Option Shares (in addition to any legend
required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
EITHER (i) THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR (ii) ANY
APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF SECURITIES. NO
TRANSFER OR OTHER DISPOSITION OF THESE SHARES, OR OF ANY INTEREST THEREIN,
MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND SUCH OTHER STATE LAWS OR PURSUANT TO EXEMPTIONS FROM
REGISTRATION UNDER THE ACT, SUCH OTHER STATE LAWS, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER."
8. REASONABLE BEST EFFORTS. Seagate and Conner shall take, or cause to
be taken, all reasonable action to consummate and make effective the
transactions contemplated by this Option Agreement, including, without
limitation reasonable best efforts to obtain any necessary consents of third
parties and governmental agencies and the filing by Seagate and Conner promptly
after the date hereof of any required HSR Act notification forms and the
documents required to comply with the HSR Act, subject to the provisions of
Section 5.9 of the Reorganization Agreement.
9. CERTAIN CONDITIONS. The obligation of Conner to issue Option Shares
under this Option Agreement upon exercise of the Option shall be subject to the
satisfaction or waiver of the following conditions:
(a) any waiting periods applicable to the acquisition of the Option
Shares by Seagate pursuant to this Option Agreement under the HSR Act shall have
expired or been terminated;
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(b) the representations and warranties of Seagate made in Section 6
of this Option Agreement shall be true and correct in all material respects as
of the date of the Closing for the issuance of such Option Shares; and
(c) no order, decree or injunction entered by any court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
in the United States shall be in effect which prohibits the exercise of the
Option or acquisition of Option Shares pursuant to this Option Agreement.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change in the number of issued and outstanding shares of Conner Common Stock by
reason of any stock dividend, stock split, recapitalization, merger, rights
offering, share exchange or other change in the corporate or capital structure
of Conner, Seagate shall receive, upon exercise of the Option, the stock or
other securities, cash or property to which Seagate would have been entitled if
Seagate had exercised the Option and had been a holder of record of shares of
Conner Common Stock on the record date fixed for determination of holders of
shares of Conner Common Stock entitled to receive such stock or other
securities, cash or property at the same aggregate price as the aggregate Option
Price of the Option Shares. In the event that any additional shares of Common
Stock are issued after September 2, 1995 (other than pursuant to an event
described in the preceding sentence of this Option Agreement), the number of
shares of Common Stock subject to the Option shall be adjusted so that, after
such issuance, the number of shares of Common Stock subject to the Option
(ignoring any exercise of this Option) equals at least fifteen percent (15%) of
the number of shares of Conner Common Stock then issued and outstanding (other
than shares of Conner Common Stock issued pursuant to the Option); PROVIDED,
HOWEVER, that nothing contained in this Section 10 shall be deemed to authorize
Conner to issue any shares of Conner Common Stock in violation of the provisions
of the Reorganization Agreement.
11. EXPIRATION. The Option shall expire at the earlier of (y) the
Effective Time (as defined in the Reorganization Agreement) or (z) 200 days
after termination of the Reorganization Agreement in accordance with the terms
thereof (such expiration date is referred to as the "Expiration Date").
12. GENERAL PROVISIONS.
(a) SURVIVAL. All of the representations, warranties and covenants
contained herein shall survive a Closing and shall be deemed to have been made
as of the date hereof and as of the date of each Closing, except for the
representations and warranties in Section 5(d) hereof which shall be deemed to
have been made only as of the date hereof.
(b) FURTHER ASSURANCES. If Seagate exercises the Option, or any
portion thereof, in accordance with the terms of this Option Agreement, Conner
and Seagate will
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execute and deliver all such further documents and instruments and use their
reasonable best efforts to take all such further action as may be necessary in
order to consummate the transactions contemplated thereby.
(c) SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Option Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Option Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Option Agreement or affecting the validity or enforceability
of such provision in any other jurisdiction. Notwithstanding the foregoing, if
such provision could be more narrowly drawn so as not be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Option
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
(d) ASSIGNMENT. This Option Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns; PROVIDED that Conner shall not be entitled to assign or otherwise
transfer any of its rights or obligations hereunder.
(e) SPECIFIC PERFORMANCE. The parties agree and acknowledge that in
the event of a breach of any provision of this Option Agreement, the aggrieved
party would be without an adequate remedy at law. The parties therefore agree
that in the event of a breach of any provision of this Option Agreement, the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach of such provision, as well as to obtain damages for breach of
this Option Agreement. By seeking or obtaining any such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
(f) AMENDMENTS. This Option Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by Seagate and Conner.
(g) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to be
sufficient if contained in a written instrument and shall be deemed given if
delivered personally, telecopied, sent by nationally-recognized, overnight
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the other party at the following addresses (or such other
address for a party as shall be specified by like notice):
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If to Seagate:
Seagate Technology, Inc.
920 Disc Drive
P.O. Box 66360
Scotts Valley, CA 96067-0360
Attention: Donald L. Waite
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Larry W. Sonsini, Esq.
Telecopier: (415) 493-6811
If to Conner:
Conner Peripherals, Inc.
3081 Zanker Road
San Jose, CA 95134
Attention: P. Jackson Bell and Thomas F. Mulvaney, Esq.
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein, Esq.
Telecopier: (212) 403-2000
(h) HEADINGS. The headings contained in this Option Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Option Agreement.
(i) COUNTERPARTS. This Option Agreement may be executed in one or
more counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(j) GOVERNING LAW. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein.
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(k) JURISDICTION AND VENUE. Each of Conner and Seagate hereby agrees
that any proceeding relating to this Option Agreement shall be brought in a
state court of Delaware. Each of Conner and Seagate hereby consents to personal
jurisdiction in any such action brought in any such Delaware court, consents to
service of process by registered mail made upon such party and such party's
agent and waives any objection to venue in any such Delaware court or to any
claim that any such Delaware court is an inconvenient forum.
(l) ENTIRE AGREEMENT. This Option Agreement, the Confidentiality
Agreements and the Reorganization Agreement and any documents and instruments
referred to herein and therein constitute the entire agreement between the
parties hereto and thereto with respect to the subject matter hereof and thereof
and supersede all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and thereof.
This Option Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the successors and permitted assigns of the parties hereto.
Nothing in this Option Agreement shall be construed to give any person other
than the parties to this Option Agreement or their respective successors or
permitted assigns any legal or equitable right, remedy or claim under or in
respect of this Option Agreement or any provision contained herein.
(m) EXPENSES. Except as otherwise provided in this Option Agreement,
each party shall pay its own expenses incurred in connection with this Option
Agreement.
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IN WITNESS WHEREOF, the parties have caused this Option Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
SEAGATE TECHNOLOGY, INC.
By:
------------------------------------------
Name:
Title:
CONNER PERIPHERALS, INC.
By:
------------------------------------------
Name:
Title:
[SIGNATURE PAGE TO STOCK OPTION AGREEMENT]
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